Maire S.p.A. (MAIRE) Earnings Call Transcript & Summary

Good afternoon. This is the Chorus Call conference operator. Welcome and thank you for joining the Maire Tecnimont Full Year 2021 Financial Results Conference Call. [Operator Instructions] At this time, I would like to turn the conference over to Mr. Pierroberto Folgiero, CEO of Maire Tecnimont. Please go ahead, sir.

Good afternoon, everyone. Thank you for attending the full year 2021 financial results conference call. 2021 has been another year of solid growth and improving performance again. Revenues and EBITDA profitability are perfectly in line with the annual guidance that we provided a year ago and that was continuously confirmed throughout the year. Cash flow generation has been particularly strong this year, up EUR 232 million, up almost 60% from 2020. As a consequence, we have gone back to enjoy an adjusted net cash position at EUR 354 million improvement since the low in Q1 2020, which was heavily impacted by the start of the pandemic. Despite of all the challenges and difficulties that we had to face since then, our net financial position improved every single quarter. Similarly, adjusted net working capital improved by EUR 104 million last year. 2021 will also be remembered as the year when we had our highest ever order intake, EUR 6.4 billion and backlog, EUR 9.5 billion. These extremely impressive performance is concrete evidence of the strength of the business drivers underlying our sector as well as of the solid trust that our clients recurring the new put on our group. For this, we thank them. In spite of our record year, our commercial activities keep on running at full speed, with over EUR 63 billion worth of opportunities, both in our traditional business and in Green Energy. The latter continues on its expansion path with new technology-driven and EP and EPC projects started that will lead to additional ones this year. Finally, our Board has approved today a resolution to propose a EUR 60 million dividend to the next AGM that will take place in April. This payment will bring the average payout ratio of the last 3 years back to slightly above our historical average of 33%. It is meant to be a reward for all our shareholders who stuck with us throughout the pandemic, especially in 2020, when the 2019 dividend payment was canceled along with the vast majority of companies around the world. In conclusion, we are sailing on a steady ship, continuously delivering growth and shareholder value while advancing in energy transition. Our main consolidated financial results and KPIs are shown on Page 4 and will be discussed in more detail by Alessandro later in the presentation. In light of current events in CIS region, we told an update on our Russian projects would be appreciated by the market. As those who follow our sector understand the fundamental drivers which are the basis of our core business while being global, lead to different opportunities in different geographies at different times. The key to success is to be able to identify these changing opportunities. The award of the first Amurski project in 2017 led to an increase of our presence in the Russian region, both in absolute and in relative terms. Over the following years, 2 major effects took place. On one side, Amursky and other projects in the same region were executed, leading to a decrease of 63% over the last 4 years in the Russian vector. On the other side, an increasing number of opportunities in other geographies have led to significant awards in different areas, including the Middle East and Africa. This wave of awards has been driven by renewed investments in petrochemicals, energy transition and sustainable chemistry. These 2 current effects have led to the proportion of the Russian projects in our backlog to significantly decrease from 56% in 2017 to 17% in 2021. This said, let's take a more detailed look at our backlog in Russia. The Russian backlog is basically composed of 3 projects: the 2 Amursky and Kingisepp 2. Amursky 1 is the biggest of them with a value close to EUR 4 billion at the time of its award in June 2017. As noted in our full year 2021 press release, this project is in its final stage and can be considered in the process to be completed. With the exception of the construction activities of Kingisepp 2 project, most of the activities still to be carried out in the country are essentially focused on procurement in which the majority of material purchase orders have already been issued and in many cases, delivered on site. For the Kingisepp 2 project alone, the only EPC project, construction activities are planned to be carried out on the site by the Russian subsidiary manufacturing in Russia to local construction companies, which are already mobilized at construction site because of the availability of engineering works and construction materials. All in all, the 2 remaining projects are in advanced stage with the majority of activities to be carried out locally and as such, are not expected to be negatively impacted by the current sanctions. The group has already dealt with the application of sanction regime in the past, both for logistical and operational aspects. And for aspects linked to the financial transaction, and we stand ready to operate in any environment efficiently and effectively. Let's analyze now our operational portfolio. As mentioned at the beginning of this presentation, 2021 will be remembered as the year we recorded our highest order intake ever. At EUR 6.4 billion, last year acquisitions were 2.5x the historical average between 2010 and 2020. To put it into perspective, it is higher than the combined 2019 and 2020 order intake, a remarkable achievement if we consider the challenging environment we are still facing. Similarly, the book-to-bill ratio was 2.2x last year, twice the historical average of the previous 10 years and our best performance ever. Now let's have a closer look at the main prospects, which were awarded to our group in 2021. The order intake has been very diversified, both geographically and by business and includes large and smaller projects aligned. So in addition, worldwide 2, we go from the $3.5 billion Borouge 4 petrochemical complex in Middle East to the EUR 430 million CPC project in Portugal, passing through the $1.5 billion renovation of the Port Harcourt refinery in Nigeria and EUR 450 million [indiscernible] PetChem plant in India, impersonating Germany. Let's have a more detailed look at the bigger projects in our backlog at the moment. In early December, we were awarded a $3.5 billion CPC project by Abu Dhabi polymer company, also known as Borouge, a joint venture between ARDECO and Borealis. The award consists of 3 separate EPC packages related to the fourth expansion phase of the wise polyolefin complex in Abu Dhabi. The polyolefin unit package includes 2 polyolefin units with a capacity of 700 tonnes per year each and 1x end unit. The cross linkable polyolefin unit package and the utilities and of sight package, which includes the utilities of off sites units for the Borouge 4 project. The project of work entails complete engineering services, equipment and material supplier reaction and construction activities, commissioning and persistence. The completion is expected in 2025. Once the project is completed, the waste complex will be the world's largest single site polyolefin facility. Our group has been supporting the UAE to create value by developing its energy transformation industry since the late '90s with the first Borouge polyolefin complex, Borouge 1, completed in 2001. After 3 additional expansion projects in 2007, 2010, 2018, Borouge 2, Borouge 3 and Borouge PP5, respectively, the group has completed the front-end engineering design services for the Borouge 4 project in 2020. Leveraging on our proprietary expanded portfolio of digital solutions, we actively worked right from the FEED stage to Borouge teams to transform their business requirements into executable digital initiatives. This will ensure excellent EPC execution and to improve the operation and maintenance of the new facilities since their inception in order to make Borouge 4 a future-ready industrial complex. These 3 contracts confirm our global leadership in polyolefin and represent additional evidence of our value propositions liability when it comes to support clients in transforming natural resources into value-added industrial applications for everyday life. It also confirms the validity and effectiveness of our early involvement approach with all our clients. The highest order intake ever has obviously led to the highest backlog level recorded by this group. At EUR 9.5 billion, the backlog at the end of 2021 was almost twice the 2010, 2020 historical average and almost 3x the lower size in the same period. Such a high level, which translates into a backlog cover of 3.3x put us in a comfortable position and attitude towards the future, which will be characterized by growing revenues, leading to a size which has never been reached before. It's the dawn of a new era. Our backlog continues to be characterized by an overwhelming proposition of gas monetization and energy transition projects. Moreover, the recent order intake has made the backlog even more geographically diversified with an even split between the Middle East, Europe and the remaining geographies. This diversification is extremely relevant in light of the current geopolitical events as the following slide shows. Let's focus now on our 2 business units. Starting from the main one, we continue to maintain a good balance between volumes, marginality and duration in the backlog. The E and EP portion amounts to about EUR 1.3 billion or 13% of the hydrocarbons backlog. This contributes to the derisking of our existing business, a very relevant factor in these volatile times. The backlog program is 2.9x, providing a very high visibility for the future. Following the acquisition in 2021 the portion of gas monetization and transition fuels project in our hydrocarbon backlog is now 80.5% at the end of the last year. This is a reflection of our Green DNA and the fact that this group is committed to and is active player in the energy transition process, which is already a dominant factor in our current strategy and position now and going forward. Moving on to the commercial opportunities. Our pipeline has increased by EUR 3.5 billion last year, in spite of more than EUR 6 billion of new contracts being awarded in the same period. Such an increase is further testament of the resilience of our core business, strongly supported by a powerful business drivers, such a positive environment bodes well for our group's growth prospects in the years ahead. Geographical breakdown shows a few changes in terms of geopolitical allocations, mainly as a result of projects being awarded and new projects entering the pipeline. Middle East continues to be the most important area in terms of opportunity as the new wave of downstream investment is taking place as we speak. Overall, our pipeline remains extremely strong and geographically diversified, continuing to provide solid support to the future -- for the future awards in the short term and medium term. Let's move now to the Green Energy business unit. 2021 was a very fruitful year in our Green Energy business yet again as we have implemented a significant number of initiatives, partnerships, agreements, but also E and EP projects. We have enriched our technology portfolio throughout the year in order to ensure a top-notch energy transition value proposition for our customers. Our objective is to originate new initiatives and more and move them along the value chain in order to reach the EP and EPC stage. To this effect, we have been awarded some important fees and engineering studies including, among others, the FEED for the realization of the PLA plant in [indiscernible], France by Total Corbion, the first of kind in Europe, FEED from Green ammonia plant in U.S.A. Based on our proprietary, Stamicarbon, green ammonia technology and engineering works for a carbon capture plant at an ENI natural gas plant in Italy. Our commitment is strong and covers a wide range of energy transition technologies based on our traditional core business, Doha. Bioplastics, renewable [indiscernible] fuels, renewable and low-carbon hydrogen, chemical and mechanical plastic recycling as well as deepen solution to capture and reduce CO2 emissions in hard-to-abate industries. Energy transition is the physiological evolution of our business, and we expect to continue reaping the benefits of our efforts this year as well. Let's move now to our hydrogen proposition. This week, we launched Maire Tecnimont hydrogen campaign to market our renewable and low-carbon hydrogen strategy based on more than 50 years experience in hydrogen technologies. We offer an end-to-end value proposition to our customers as we are present throughout the entire value chain from using different feedstocks to the green and low carbon molecules. In renewable hydrogen, we provide a complete integration of the best available technologists in the market from green electrons through our renewable subsidiary to Green Hydrogen and other green molecules such as green ammonia. As far as low carbon hydrogen is concerned, we developed our proprietary technology to produce the electrified blue hydrogen, reducing the production of CO2 emissions to be captured by 45%. Finally, we developed our Silca hydrogen solution, relying on a portfolio of technologies to transform nonrecyclable ways into Silca Gas with an overall reduction in carbon footprint of 90% compared with conventional steam reforming, gray hydrogen and waste incineration. Over the next few years, we expect a strong increase in renewable and low-carbon hydrogen demand from industries such as chemicals, oil and gas refining, fertilizers team, where we are already playing a leading role. Hydrogen is here to stay and is not just a fact. It is for this reason that we have strengthened our organizational structure, introducing both a dedicated unit full of senior and experienced professionals, some of them coming from the outside and the business Board to better coordinate the hydrogen initiative across the group's companies. With over 50 years of experience in hydrogen technology, we are the go-to organization in this important and growing area of energy transition. Now let's take a look at the 2 latest green energy projects, which will provide a solid contribution to our growth in the new future. Last December, we were awarded engineering awards by ENI for a carbon capture plant at the natural gas plant of Cassa Depositi in Northern Italy. The plant would be able to separate the CO2 from emissions from the natural gas plants turbo compressor to define and compressing them, thus allowing the capture of about 25,000 tonnes per year of carbon dioxide, which would otherwise be released into the atmosphere. The technology use for the capture of CO2 emissions, gases operates at high efficiency and low power consumption, even on low concentrations. It has already been widely used to capture emissions of hard-to-abate industrial sector worldwide. In this respect, our subsidiary NextChem has developed a range of solutions that recycle CO2 to produce new chemicals in view of an increasingly Circular Economy based on industrial symbiosis. Initial phase could expand into a full EPC project, should certain conditions take place. A week after the ENI award, we were awarded an engineering and procurement project to implement 2 catalytic partial oxidation reactor units for the steel production plant on behalf of Paul Wurth. NextChem will be a technology partner in order to implement natural gas pad, seeing gas generation for a blast furnace by substituting coke with a single production of 140,000 cubic meter. However, via its proprietary CPO technology. The project scope of work includes the supply of proprietary technology, basic design and detailed engineering to get equipment and catalysts. This will facilitate a future natural gas conversion to hot syngas. NextChem will be also responsible for the supervision over the conduct of tests and the start-up of the CPO reactor units. The project's completion is expected within 16 months from the signing date. SMS Group select NextChem because of its knowledge and expertise of technology provider and its leadership in singles production from natural gas. The proprietary CPO technology to be deployed by NextChem enables the production of synthesis gas from natural gas and other gases, hydrocarbons and weak and rich air and air blown reactors. The steel sector is today one of the more interesting hard-to-abate indices on the road to decarbonization. This is one of the technologies from our portfolio that reduces the use of coal by substituting it with a synthetic gas derived from natural gas. This will be a crucial component of the set of the energy. Such a technology will help close the gap between the renewables installed capacity and the growing demand from energy not derived from coal. As we continue to push our Green Energy business, the commercial pipeline in these areas is also growing. As of the end of last year, we were pursuing opportunities worth about EUR 6.6 billion, up EUR 500 million in the period. While a good portion of the prospects is European-based, we continue to push other geographies, starting from Asia and the Americas. As we have been talking about our green energy business, let me give you an update on our leadership strategy and approach in 2021. Our strategy is firmly focused on creating sustainable value for our shareholders and stakeholders as the United Nations Sustainable Development Goals are an integral part of our industrial development plans or organization. In this slide, you can appreciate the 4 pillars of manufacturing on ESG strategy, which is centered around the environmental sustainability, the value of our people and of the territories where we operate and the innovation which relies on our technological DNA. Our strategic frailties include the commitment to be a key enabler of the energy transition, lowering the environmental impact of traditional processes, enabling more plastic circularity, facilitate the transition to hydrogen economy and finally, contributing to the developed sustainable mobility. All these while being at the same time an enabler of social programs orchestrated through a strong ESG-oriented governance. Sustainability is a continuous part -- and in the next slide, you will see the milestones we have achieved in 2021 as well as our ambitions for the next few years. In 2020, we continue to develop projects aimed at enabling our customers to reduce their carbon footprint, consolidating and developing the new energy transition and green chemistry technology. Our goal is to be the partner of choice for our customers in achieving their capitalization targets to enhance reduction of our carbon footprint. Moreover, in 2021, we launched the Net Zero trust ports, which is implementing an action plan for sustainable mobility, equipment, procurement, logistics and packaging. We also started the Green project to improve sustainability of our construction sites. Based on 2021 results, we are well on track to achieve our reduction ambitions for 2023. Last year, we also launched the new diversity and inclusion work group. We enhanced the number of our patents and further develop our digital platforms, which not only enhanced competitiveness, but is also a key strong in the energy transition process. In terms of government, last year, we adopted the new business integrity codes as planned. We have also decided for the first time to include the ESG objective in all MBO incentive plans as evidence of the key role sustainability plays for the group. We are also proud of the exceptionally strong value created for our shareholders with 132% total return in 2021. Our efforts have also been rewarded by the top external ratings by some of the most prestigious organization in this space. This is an ongoing and continuous process, which evolves and improves every year. We look forward to the next challenges, which will position our group to an even higher standing in terms of ESG. Health and safety of all our employees is a top priority of the group. We are strongly committed to maintaining our positioning as a champion in health and safety with a lost time injury rate KPI, which has been 3.5x better than the benchmark in 2021. In fact, we always managed to keep this rate of an extremely low level throughout the year as working in a safe environment has always been part of our DNA and supported by the investments we carried out in this area. To this effect, training is a central pillar in our health and safety strategy. As a consistent, last year, the number of training hours grew by 28% to 1.6 million. This number includes training hours about safety project quality and SA 8000 certification and socially acceptable practices in the workspace. Last year, we also launched our Stop and Coach program, whose inspiring principle or dialogue and a proactive approach of construction teams. These programs aims at increasing the engagement and safety awareness of these teams by encouraging them to promptly implement corrective actions in case something goes wrong, [indiscernible] or not in compliance with our safety principles. With a consistently better performance than the sectors, we are on the right path to be a leading and sustainable contractor of the future. I now hand over the microphone to Alessandro, who will discuss our financial performance. I will be back to provide you with some final remarks. Alessandro?

Thank you, Pierroberto. So our 2021 revenues grew 8.9% to EUR 2.9 billion. Such an increase is mainly due to the new acquisitions starting to provide a positive contribution to our top line, which is expected to continue increasing over the course of the following quarters as the massive order intake starts to kick in. Contract gross profitability was EUR 323.3 million, up 3.7%, a remarkable achievement considering that the 2020 figure benefited from the cost savings plan implemented following the start of the pandemic. The 11.3% result in margin is still way above the 2017, 2020 average of 10.6%. G&As were EUR 72.9 million, up only 2.3%. This slight increase of EUR 1.6 million is extremely limited due to our continuous attention to these expenses and those who please consider that the 2020 figures also benefited from the above-mentioned cost savings plan initiatives. 2021 G&A would be much lower than the corresponding figure in 2020 on a like-for-like basis. Our ongoing commitment to bring chemistry continues to be demonstrated by a growing amount of R&D expenses, up 12.9% to EUR 9.1 million. . EBITDA was EUR 173.7 million with a profitability of 6.1%, in line with the previous quarters and with last year's guidance confirmed throughout the year. Net financial charges were EUR 16.1 million, down EUR 28.8 million, driven by 2 main reasons: first, by a more efficient capital structure in 2021; and second, by a positive effect in the valuation of certain derivative contracts as well as by a higher amount of financial income generated by a higher level of deposits. The tax rate was 29.3% down versus our historical average, mainly due to the tax savings arising from the special tax rules associated with our innovation and technology R&D activities. The expected tax rate for 2022 will be substantially in line with last year's. In conclusion, the positive operating performance, coupled with an appropriate management of financial costs, led to a consolidated net income of EUR 80.5 million, up 48.5%, while group income was EUR 83.3 million, up 44.1%. Moving on to the balance sheet. Let's analyze the cash flow dynamics. As you can appreciate from this chart, 2021 has been characterized by our tools [indiscernible] to a net cash position. We generated operating cash flow of EUR 232 million, which was the main driver for the EUR 125.8 million improvement in the net financial position. This reduction took place, also thanks to lower net financial charges as we just commented and taking into account EUR 38.1 million in dividends. CapEx of EUR 31.1 million, cash taxes of EUR 17.9 million and purchases of treasury shares of EUR 5.5 million. If you consider that at the end of March 2020, the group had a net debt of EUR 344.8 million. The improvement in the overall net financial position has been of over EUR 350 million in just 21 months. Let us take a look at the working capital dynamics. The continuous improvement in our net financial position goes hand-in-hand with a corresponding improvement in our net working capital, which is now negative once again. The EUR 104.1 million improvement in 2021 follows the EUR 190.7 million that took place in the last 3 quarters in 2020. The net working capital improvement this year has been positively impacted by the advances related to the significant order intake as well as the cash-ins across several projects, including the 2 Amursky 1s. These events more than compensated an increase in net working process as projects continue to advance to the relaxed milestone. Please consider that about 43% of this increase is related to both Amursky project and whereby, Amursky 1 construction activities are regulated on a reimbursable basis, a dynamic which is now very familiar to you and follow the natural and healthy evolution of this project. We are happy about this continuous improvement, and we will continue to work in order to further improve our net working capital. I now hand over the microphone for his concluding remarks to Pierroberto.

Thank you, Alessandro. In conclusion, 2021 has been a very remarkable year as our solid financial performance as quarter confirm that we are on a stable growth pace. A record high order intake and backlog are both providing a solid foundation to future revenues, leading to a size that this group has never experienced before. Our Green Energy business continues to develop as new agreements have been signed a new E and EP projects started. EPC projects will follow through this year. At the same time, our strong and growing commercial pipeline is expected to deliver new projects both in the traditional and Green Energy businesses. As a consequence, we are releasing our 2022 guidance, which is based on the strong foundation built last year. Revenues in the range of EUR 3.4 billion to EUR 3.6 billion, an average increase of 20%. And EBITDA profitability in line with 2021 and on improving net cash position. Obviously, this assumes that the current COVID-related conditions do not get any worse and that there are no material effect of the carbon and geopolitical tensions. Our investment case remains extremely strong and compelling, especially vis-a-vis our competitors as we continue to sail a steady ship delivering sustainable growth and shareholder value. This concludes our presentation. As usual, Alessandro and I stand ready to answer any questions you may have. Operations, please go ahead.

[Operator Instructions] The first question is from Mick Pickup of Barclays.

A couple of questions, if I may. Firstly, can I just ask about -- you talked about Amursky and you talked about that being the final residual to activities. I seem to recall, there was always an element of working capital that would come to you when you presented the as it is or as-built drawings. Does that mean we've got working capital to come back in on Amursky this year? And secondly, on the green business, obviously, it's developing well, and I like all the initiatives you've done. You did want to set out ambitions for EBITDA in 2023. Are we still on track for those ambitions?

Mick, as far as Amursky working capital is concerned, frankly speaking, I do not understand that your worries about this project because we have explained several times that in particular, the phase that we are doing so far, which relate to the construction activities of Amursky, this phase is remunerated on a reimbursable basis, which means to the extent we cash the money from the client, we pay the subcontractor. So -- and to the extent, the subcontractor makes possible to invoice the client in compliance with bureaucracy that has been defined by the contractor. We will be able to invoice -- to replicate the invoice of the subcontractor to the client. So it means that there is a direct connection between the amount that we have in contract assets and in the liabilities, leading to a net balance more or less close to 0. So no exposure at all. And this, of course, the dynamic of this contract in particular is strictly linked to satisfy the formal conditions, which are requested in order to be able to transform the working process into building to the client. And of course, this is a task which is predominantly referred to the subcontractor, which has to provide all the documentation requested by the contract. So there is a direct connection between the 2 elements, and the balance is close to 0.

Alessandro, let me step in because we understand this topic being also related to Russia is particularly important. Let me tell it in different words. One thing is that once we will be in the position to evolve, we will decrease our work in progress, which is what we are looking at. But at the same time, we have today an equivalent amount in our accounts payable. So it means that every euro that is coming will be -- will enter, but at the same time, we'll go in the direction of the construction company because we are accruing on the one hand, the credit; on the other end, the debit. So at the end of the day, the real working capital effect will be the 4% margin we are entitled to apply when we invoice. So the real cash in, it is not the invoicing and the working capital decrease because at the same time, today, we have an equivalent account payable. So what will remain in our pocket is the 4%. So there is no need to be worried about Amursky 1 working progress because it is simply an accounting complication. So in different words, once the project will be completed, we should even evaluate to cancel the working capital and the equivalent account payable in order for you not to see any more that issue on the table.

Okay. And then on the Green business?

On the Green business, it's a very, very, very good question. Thank you, Mick. Consider that in these days, we are rescheduling our activities in the Green business. We are also repreparing the projections on the new expectation for the famous EUR 50 million EBITDA at year 5. The updated number -- and we will be more than happy to be more precise in the future, but the new number would be a number similar to that because we are aiming at having EUR 40 million green EBITDA in 2024 as a trajectory to be higher than EUR 50 million in 2026. So according to our expectation, we are targeting up EUR 70 million in 2026. So this is the trajectory for Green business. So EUR 40 million, 2024 and EUR 70 million for 2026. So this is a kind of road map. Obviously, as we have always been telling you, the key year will be 2022, and at the same time, 2023. Let me tell you that, as you may have appreciated in 2021, we are already at about EUR 5 million EBITDA, which in the green business. So the challenges, the order intake -- the green order intake for 2022, which we are not disclosing, but it's very ambitious. If by chance we achieved that 2022 order intake, then 2023 and 2024 will be in the direction of the EUR 40 million, again for 2024 and EUR 70 million for 2026. Basically, our ambition in terms of order intake for 2022 is exactly the continuation of the engineering for the EPC that we are performing. Let me be even more precise. We are at the last step for the total Corbion PLA project. The engineering is finished. We are having a kind of follow-up of the front-end engineering. So we are seriously convinced that this exercise will translate into an EPC in 2022. At the same time, we are very committed on the CO2 capture for ENI in Casalborsetti. As of now, we are doing the engineering works in order to develop the project after the authorization and permits. According to the contract, once certain conditions will be verified then the contract will translate into EPC at the predefined price and predefined terms and conditions. And this is the second component for our ambition for 2022 in terms of Green order intake. And third, as you may know, we are with era, the municipality of the utility of ammonia in Circular Economy in a mechanical recycling plant. Also in that respect, the engineering is complete and era is expected to take the final investment decision. So with these 3 projects, we are already having a large amount of the ambitious acquisition for 2022. The remaining part in our expectation is related to the Waste to Chemical big program that we are advertising and pushing in Italy as an alternative to incinerators. Italy has to spend a lot of money according to the European PN, that's the name of the instrument, and we are heavily pushing in 12 projects in Italy -- throughout Italy, this waste to fuels, waste to chemical ideology and idea. So this is the fourth leg of our expectation for the numbers in the Green EBITDA for the way forward.

The next question is from Kevin Roger of Kepler Cheuvreux.

The first one is -- and I'm very sorry for this stupid question, but can you just confirm us that basically all the operations in Russia have not been impacted for the [indiscernible] and that construction on site, et cetera, are just continuing. And the kind of follow-up, if yes, under which circumstances which as sanctioned from U.S. or Europe, will the execution be stopped by, let's say, in either season?

Just to answer your first question and then you should help us on the second one. On the first question, the answer is very simple. There are no issue on our operations in Russia, which are continuing your market. Tell us more about the second, please.

Yes, just to know -- so basically, operation is, let's say, still on coast. Just under what kind of sanctions from U.S. or Europe, your activity will be stopped? Under which scenario you will have to stop the operation, the construction, et cetera?

Let me say that we are looking at it according to our past experience. So let me say that the most reasonable and most intelligent answer is to judge it from the past. According to the past, there is a principle which is that the pre-existing contractual obligations are out from the application. So basically, it means that I have to continue and finish what I'm doing because I'm contractually obliged to do it. So typically, it happens that all the formalities in terms of applications and fulfillments, all the formalities are concentrated in the tracing with what you are doing, what you are shipping, what you are exporting is without any doubt related to the existing obligations -- sorry, existing contracts. And this is the first set of fulfillment that we know from the past. The second set of fulfillments has to do with the financial transactions. So it is not about the logistics and the operations, it's more about the payment out and collection of money in. And this is a different area historically. For example, for Iran, specific committee -- institutional committee were set up, but again need to authorize such financial transactions, again, tracing them as necessary to finalize to fulfill the pre-existing contractual obligations. So this is our experience of the past. The first step is, what is typically called the dual use regime, which is a regime according to which to check the control is to verify that what you are shipping, and exporting is not something that is usable in order to manufacture weapons, and this is the typical regime. And on financial transaction, this is the experience we have, for example, for the old times for Iran in terms of financial transactions. Obviously, as I told you, this is the concept of allowing preexisting contract. Then there is the future. Obviously, typical sanctions are heavy on future opportunities. So I believe that if sanctions will be severe, they will hit on the future, but I believe that these sanctions are according to the kind of general acceptance principle of preexistence obligations, we would be -- I wouldn't say which is for free, but for sure, we will be in the condition to pushing up to finish our jobs without any kind of issue economically and/or financially.

Okay. So basically, no impact on your current backlog, but potentially on the future prospects. Okay. On the [indiscernible]...

Let me say just to finish because I believe it's a very interesting topic. On the future, it depends. So typically, sanctions are in the future. That was my message. On the future, it will depend on which is the specificity that the new sanctions will have in terms of oil and gas industry. For example, in past sanctions, Russia was not affected by sanctions on the downstream business. But the technologies that were prohibited were the foreign technology -- export of foreign technology to Russia in the upstream business. So for example, in the past, the downstream business was not affected. So it depends. We will wait and see.

The next question is from Massimo Bonisoli of Equita.

Pierroberto and Alessandro, two questions from me. One is on cash and equivalents in the balance sheet. How much of that cash is related to local project entities in Russian country? I mean maybe they could be restricted going forward. And the second question is on backlog contracts that was a lot of issues regarding the delays in supply and the inflation on material. If you can remember as your protection to inflation -- to spike in inflation into your contract that allows you to pass through those costs.

So let me provide you with the first answer with the first part of your question. So as you may know, we have implemented more or less 4 years ago, cash pooling system inside our group, which imply the concentration of the excess of liquidity existing worldwide in all the companies belonging to our group care of the headquarter, which apart from a minimum quantity of liquidity, which is retained in the various countries in order to satisfy the current expenses, the expenses expected over the next 1 months' time. So it means that so far, of course, also in Russia, the same policy has been applied over time. So presently, we have a minimum amount of liquidity deposit scale of local banks, which are simply enough to satisfy the obligation that our colleagues, our company based in Moscow has in front over the -- for the next few days.

So sorry on that. Can we say that most of that liquidity is -- is it at the holding level or let's say, something like that rather than the local level of these project entities...

Can you repeat, please?

So can we say that of that almost EUR 700 million in cash I see on the balance sheet, most of the cash is in your -- is that at the holding level rather than the project level? So inside the countries, banks of the project.

Of course, most of the cash that we have on board relates -- it is generated from projects in particular from the scope of works, which pertain to the out-of-country scope of work. So it means cash generated directly not in the country where the projects are generated but outside. So it means that only a very, very, very limited portion relates to liquidity, which has been generated by the project and which eventually must be returned to Russia, just in case it is necessary to satisfy the local needs, but 90% of this amount is free of any obligation.

On the second question, let me, first of all, give you the rationale. So the rationale is that in our business, as it is obviously clear that there is a pressure on the raw material. At the same time, there is a huge, huge, huge upside on the output, on the products, on the commodities. So when it comes to polyolefin and fertilizers, it is very, very clear that the price of ammonia urea, the price of any grade of polymers are at the highest ever in the industry and in the history. So let me say that our clients are very, very, very happy because our clients are becoming very rich with the sale of polyolefin and with the sale of fertilizers. So at the moment of pushing out the progress of the projects, so at the moment of ensuring that the execution is smooth. They are our first partner, and they are our first line. So all in all, this is the rationale. So we are dealing with clients that are very, very satisfied with the market dynamic, and therefore, they play very, very fairly, the exercise of acknowledging, the extra cost of the raw material. So this is quite typical of our industry because we are 100% downstream people, and the greatest part of our current jobs are in fertilizer and polyolefin. So this is the rationale. Then if you want to get into the mechanical construction dynamics -- in terms of contractual dynamics, the concept is that when I incurred the entrepreneurial risk of an EPC [indiscernible] lump sum, I was not in the position to, in any way, assess and price the post-COVID, post-pandemic price revolution. So there is no possibility in any way that I can be considered liable for such escalation. And this is, to me, a very important rationale for you to understand. Then the rest is contract management. So the rest is the way you notify. The rest is the way you quantify. The rest is the way you interact with the client in order for him to realize that if something goes wrong, their production will be delayed. Their go-to-market will be delayed. And so the value they lose is a multiple of the value they try to resist with us. So all in all, this is the contract management typical story. So this is what we have been doing since ever, and this is the way we are managing this topic. But apart from the technicalities, which are contractual dynamics, I think you should properly appreciate my first rationale, i.e., whoever is selling fertilizers, whoever is selling polymers is gaining a hell of money as of today and so they want to run fast. They want to produce more. They want the plant to be completed as soon as possible.

The next question is from James Winchester of Bank of America.

Two from me, please, and I'll take them one by one. Firstly, could you provide us with a bit more color on the phasing of your backlog, i.e., how is the EUR 9.5 billion spread out over the next 2, 3 years, please?

So before not giving you a black and white answer, but according to our policies, we don't disclose the year-on-year rollout. What we give you, which is to me, nevertheless, very interesting, is to -- is the big -- let me say, the proportion of the backlog and the revenues, and the proportion of the order intake and the revenues. And so we are giving you some instruments to somehow assess the deployment of the backlog over time.

Okay. Sure. And I just wanted to follow up on a question we had earlier about Amursky 1. I understand it's reimbursable and you've offset the increase in the contract assets with the corresponding increase in payables. But given you're in the final innings with only around 5% left, one, what do you have left to do on this project to be able to invoice and then get paid? And then two, given there's only a small amount left, does this imply that in 2022, we'll see a large drop in the contract assets?

You are -- frankly speaking, I strongly hope because, of course, the drop in contract assets and similarly, in accounts payable, as I have already stated before, it's indeed depends a lot on the weather or not the subcontractor will be able to provide all the documentation, which is needed in order to satisfy the contractual requirements defined with the clients. So to that extent, we will be in a position to have accepted the work provider, the work executed based on the documentation provided. And I repeat, that documentation must be provided by the subcontractor. Of course, we will be able to invoice and then to cash, and we will accept accordingly the invoice from the subcontractor. And accordingly, then we will pay him apart from the 5% that we retain as a margin on this transaction.

Let me be -- Alessandro, let me be even more technical clear. Consider that the plant -- typically, a plant goes through 2 kind of milestones. One milestone is the mechanical position, and the other milestone is the commission, so it's the startup of the plant. So the level of bureaucracy is in fact is so big that the mechanical completion is there, but the formalities for the issuance of invoices from the construction company to the client essentially is so big that they cannot fulfill today, despite the mechanical completion is there. Financially, it's not a problem because the construction companies continuously receiving advance payment, so they have the cash, but they cannot formalize the invoice because of dossier that Gazprom looking for. So I told last time, but I don't want to be -- to annoy you that much that they won't be as built dossier. The as-built dossier means that you have to produce the ultimate drawings, detailed drawings according to the effective final construction layout, which is something that in normally, you do it in 2, 3 years' time. But this time, Gazprom, which is a custom to manage this process according to different complexity because this process is perfect for the pipeline construction because in the pipeline construction, the drillings are black and white. But when you use this procedure not to build pipeline, but to build a kind of cathedral 70 meters high with pipes of 1 inch, this exercise is very complex. So the remedy as of today has always been to advance money, but in order to close the accounting, that's why it's an accounting gain in order to close the accounting, i.e., to issue invoices, you need to finalize this build drawing dossier, which is something very, very, very, very, very paperwork intensive. Your question is, when this paper work is going to happen so that we will see decreasing the work in progress and decreasing accordingly, the account payable? This is for us, for sure, in 2022. Because in 2022, the only remaining exercise will be debt. So the frustration is, that is not up to us. So we are helping. We are promoting. We are advising, but this collection of us built drillings, it is an activity of the construction company, and we are simply like kind of [indiscernible] in this respect. I hope I have clearly clarified that, I would say, in the -- even in the first half, even in the first quarter, one-offs of 2022, it depends on how many, I would say, diligent, detailed workers, the construction company want to allocate to this bureaucratic exercise. But again, there is nothing in this dynamic. There is nothing hidden behind. Its accounting dynamics, like it or not.

The next question is from [indiscernible] of Mediobanca.

Just 3 questions to provide you. The first one is, if you can provide us with the amount of the total backlog which is linked to lump sum contracts on the backlog you gave us before? The second one is about Russia, and which is the amount of commercial pipeline which is linked to Russia. And what do you expect from commercial negotiation in accounts for the next month? And finally, do you expect any seasonality aspect in terms of revenues in next year, meaning revenue higher in the second half or in the last quarter or many different structures in the quarter.

Consider that when we give some details in the presentation on the composition of the backlog, we give you an explanation of what is E&P, what is EPC, which is the variable we monitor in order to somehow address the appetite for construction risk. So this is, to me, the indication you should rely upon at the moment of evaluating the EPC story. So moving to your second question, the second question being the commercial problem in Russia. So the commercial problem -- as I told at the beginning, all the world is going for petrochemicals, and Europe and certain areas of the world are going also for energy transition. Those are the 2 big engines in our commercial pipeline. So looking into the PetChem engine, all the world is working in that direction. So Russia, but also Southeast Asia, but also North Africa, but also Middle East, all the world is looking at polyolefins, and this is the specialty of our group. So the pipeline in Russia is robust. The possibility to pursue it, as I told you before, is depending upon the exact characteristics of sanctions for the future business. I told you in the past, it was concentrated in the upstream. I don't know what is going to be published. If by chance it is upstream only, we will pursue Russian downstream opportunity, which are there. But if by chance, this is not the case, believe me, with more than 60 billion pipeline everywhere in the world, the last issue of my Maire Tecnimont is to have addressable commercial opportunity. So if this is the concern of the market, if the market is hitting so heavily, our share, please, whoever is connected today at this conference call, please [indiscernible] quite and transfer. The world is asking for PetChem and the PetChem is everywhere, and we are the name in polyolefin. So the last issue of this company will be what business opportunity I can pursue today.

As far as your third question is concerned, in terms of seasonality, let me say that we, for sure, we are more exposed to seasonality, i.e., weather conditions in the recent past when some of our contracts were located in a very harsh environment. Considering what we have in front of us, in particular in the course of this year and the following years considering where our backlog is located in terms of countries of origin of the various projects, let me say that our exposure to weather condition and consequently to seasonality is much lower today.

[Operator Instructions] Gentlemen, there are no more questions registered at this time.

Thank you for attending. So long. Thank you.

Ladies and gentlemen, thank you for joining. The conference is now over. You may disconnect the telephones. Thank you.