Mota-Engil, SGPS, S.A. (EGL) Earnings Call Transcript & Summary

Ladies and gentlemen, thank you for standing by, and welcome to Motor-Engil Full Year 2023 Results Presentation. [Operator Instructions]. After the presentation, we will run a Q&A session. [Operator Instructions]. I would now like to turn the conference over to Pedro Arrais. Please go ahead, sir.

Thank you very much. Good afternoon to you all for attending this call where we will present the full year '23 results. I have Carlos Mota Santos, the Chairman and CEO of the company; and Jose Carlos Nogueira, the CFO. As usual, the CEO will start the presentation with some key highlights. And after that, I will make the presentation of the bulk of the full year results. Mr. Carlos Mota Santos will present after that, the Chapter 4 and 5 regarding the concessions strategic insights and the final remarks and outlook. And at the end, both members of the Executive Committee and the Board will be available to all your questions. Please Carlos the floor is yours.

Thank you for attending the call. I would like to start by the slide that is regarding the key highlights. During 2023, we reached a turnover of slightly over EUR 5.5 billion. That is almost a 50% increase when compared with the 2022 year results. But most important, we did increase over 50% our profitability, namely in terms of EBITDA, reaching EUR 837 million and an increase over 100% in terms of net profit to the company. So that is around 2% net profit margin. Our backlog, we finished the year with a backlog almost reaching the EUR 13 billion. So we did increase our backlog during the year despite a very, very sound turnover during 2023. We closed the year with a net debt of EUR 175 million, that is below our target of 2x net debt over EBITDA. So we've improved from the previous year from 1.7% to 1.4%. And also in terms of debt, the gross debt was almost EUR 2.8 billion. That is also below the target that we established for 2026 or 4x. So we reached by the end of the year, a gross debt over EBITDA of 3.3x. In terms of CapEx, we did slightly above EUR 500 million, in which 76% of that CapEx that we will explain later in more detail, 76% of this CapEx was in gross and long-term contracts. We had an improvement in our cash flow from operations of EUR 80 million. So we closed the year in BRL 688 million. That is an increase when compared with 2022. And also a quite remarkable performance in terms of equity of almost an increase of EUR 200 million in our equity. And we reached the 10% of financial autonomy, equity over assets to 2 points or 2% above 2022. And towards the objective, the goal that we have established for 2026 that, as you know, is above 15%. So moving on to the next slide. We would like to remind you that during this year of 2023, actually, in June, we did a review in our goals for 2026, namely some of them that will stress here that is to reach net income, the net profitability towards the group -- to 3% by 2026. As I said, we are paving the way in that -- towards that goal, we reached during the last exercise 2%. Another strategic pillar that we have is to have a much more strengthen balance sheet and in that sense, we review 3 main goals that 2 of them regarding the debt, net debt over EBITDA, gross debt over EBITDA that I already explained to you. And also, we are doing the journey to increase our financial autonomy by 2026 by over 15%. This is a very important goal for us in order to have a more robust balance sheet for the future. Last but not least, as I have been telling you in the last opportunities, we are very much focused on the cash generation, not only in terms of profitability but then turning that profitability into cash. So we want to reach the 16% EBIT by 2026. We did improve from last year from 14% to 15%, as I had the chance to explain to you last year. We did not decrease the profitability between '21 and '22. What we did or what happened was that we had a much bigger contribution from the engineering construction in 2022 when compared with 2021. And of course, as you know, engineered Construction has a lower EBITDA when compared with the service sector. Nevertheless, in 2023, also with a very high contribution as we are going to see in the next slides. Coming from engineering construction, we did improve our EBIT from 14% to 15%. That will give us a picture or a clear picture that we will, for sure, reach the goal that we established and reviewed by 2026 of having what is the 16% EBITDA margin by 2026. And also, as you know, one of the goals that we have is to improve our cash flow, and we did improve our cash flow coming out from operations consistently from '21 to '22 and now from '22 to '23, but we are still paving the way towards that objective. So -- what is our future to be very focused on the core markets in bigger projects in concessions and in long-term contracts, thus promoting a higher efficiency, but most importantly, to increase the profitability of the company. We -- now that we concluded the transaction that we announced with Urbaser, we are now the sole shareholder of our environmental companies. And in that way, now we need to extract a greater value coming out from that business, namely not only increasing the profitability and to growth in our international activities, but also extracting and creating more value in our home business here in Portugal coming out from the waste treatment concessions and to be able to create new business in different contracts, in the new context in the energy transition period cycle that we are leaving, but also in the circular economy that is going to be more and more demanding. In terms of profitability, -- we -- as I said, we are very much focused on increasing the profitability in order to have a more resilient and a more robust balance sheet. And in that way, we did an important disposal of an asset in 2023 that the transaction will be concluded in 2024. That is the disposal of our Polish operations, namely the operations, in engineering, construction and in real estate. We are waiting only for the approval from the competition authority in Poland so that the transaction can be concluded. We will continue to do our asset rotation policy in order to create more and more value generation. And that will be speeded up during this year as we will have the chance to talk about in the slide that we are going to present in the end of presentation regarding the concession strategy that we are now materializing and that we will have in the future to come. So thank you very much. This was the key highlights. I will now -- sorry, and also the last slide in this first -- in the introduction. That is also, as you know, ESG has been a top priority in our strategic journey in our strategic plan. We are very much committed towards our goals in terms of ESG targets for 2026. And I would like to share with you a score that we just received for senator pools in which between the 3 parameters, environmental, social and governance. We -- as you can see in that slide, we are above the industry ever. So when compared with the industry, we are in a higher position than the average. So this gives us confidence that we are doing the correct works towards to become even more sustainable towards our stakeholders and with our business. Also, I would like to stress that we have a very high score in terms of data availability that shows the total transparency that we have with these issues towards the markets and throughout our stakeholders. So now I just finished the introduction. I will pass again to Pedro are so that you can do results overview. So thank you.

Thank you, Carlos. I will suggest that we move to Slide 7. Here, you can see the breakdown of the P&L and highlighting a record level of production in the second half of ’23 when we achieved a turnover of almost EUR 3 billion, a very impressive figure and putting the company in a very different and a higher stage of dimension. When you look to the record level of the full year '23 with 55 billion of turnover. The EBITDA margin, as Carlos said before, increased to 15%. And it's also important to mention the significant increase of EBIT with more than double year-on-year to EUR 560 million. And even with the impact of the expected increase of debt interest costs, the company achieved an increase of 120% growth year-on-year in the net profit to EUR 113 million, a record level in the 77 years of history in our company and showing the second consecutive year with a relevant improvement in the net margin, double in only 2 years. Moving to Slide 8. We can see here the detailed performance by business units, where we can see relevant growth resulting for EC division with an increase of 54% year-on-year and with all the regions having double-digit growth and presenting improvement in its operational margins, reflecting a combined impact in effect on growth and higher profitability at all levels in the EC division. In environment and as expected and in line with the guidance we gave to the market. Regarding that, 2023 was the transition year when which we concluded at the end of '23, the transaction with Urbaser and with a lower activity in the international segment. This division presented a turnover of EUR 58 million and a resilient margin of 21%. In the more recent business areas like Moten Capital and MAX, we should highlight the increase year-on-year of 27% in turnover, and we are in line with the driver of diversification of the company. Moving to Slide 9, we can see here that the company sustained record levels of backlog. And with this achievement is important to highlight that, as I mentioned, 2023 was the second best ever commercial year regarding the EUR 6 billion awarded only surpassed by the -- we have been awarded with EUR 1.6 billion that are not included in the backlog, considering that these contracts were signed after December. With these contracts, if we consider 1.6% with the figure of EUR 13 million, we should consider here a very comfortable ratio of backlog and easy turnover in average to almost 3 years of activity in easy division. Moving to Slide 10. I will not elaborate on that, but you can see here the relevance of the core markets in the list of the major construction projects currently in backlog and in segments like the railway and industrial engineering. Moving to Slide 11. Here, you can see the total CapEx presented of EUR 53 million, with growth in long-term contracts, representing 76% mainly channel to environment that increased year-on-year from EUR 76 million to EUR 112 million, regarding the 2022 2024 investment plan in EGF, the treatment company in Portugal and also in Africa, mainly in industrial engineering and in contracts that are generating cash flows since the beginning of exploration in the cases of the recent contracts awarded. Important also to mention and I'm here since 208, I'm here 16 years in the company, and I never saw such an impressive and positive results in the EC maintenance CapEx, roughly representing 1% of the turnover of this division. And this reflects a very efficient management of every equipment being in this sense, a relevant contributor to the improvement in EC margins overall and allowing higher capacity of the company to allocate investment to growth and long-term contracts. We can move to the Slide 12. Here, we can see a stable working capital evolution with cash conversion measures supporting this positive evolution during the recent years, in which we can highlight the higher contribution from the relation -- the growing relation with export credit agencies with DFIs that improved our performance regarding working capital management. In fact, the consolidation in the recent years of the improvement of working capital management allows the company to achieve in December a solid, very positive ratio of minus 3% in working capital by sales. Moving to Slide 13. We can see here the improvement year-on-year on the free cash flow from operating for EUR 688 million, an improvement of EUR 80 million-on-year. And here, you can see that the record level of EBITDA generated the cash needed to support increase of CapEx and the payments of other financial costs and taxes. And in this sense, the increase of debt that you can see here are only related with the investments that the company decided to make in concessions and another strategic investments where we will further present the capacity of the group to generate capital gains for the company and future investments that are generating cash as a result of the asset rotation strategy after the construction stage on the greenfield projects. The increase here is related on that with a very positive evolution regarding the cash flow from operations. Moving to Slide 14. We can see here on room to the debt evolution in more detail. Important to mention that the debt evolution is aligned with the strategy of value creation reflected, first, in a controlled level of net debt EBITDA of 1.4x, the best ratio in more than a decade and aligned, as I mentioned, with the goals and the targets to the strategic plan, 22-26, that I remember that is net debt to below 2x. And as you're right in the slide, you can see the same evolution, the positive evolution in the ratio regarding gross text.3x from 4.5x in 2022. Moving to Slide 15. We can see here the positive evolution also in the liquidity position of EUR 1.4 billion in December, improving the figure from 1.2% in 2022 with these amount surpassing the non-revolving final financing installments for the next 3 years, worth highlight that from the debt with maturities with less than 1 year, BRL 236 million is already financed or refinanced shortly. Also important to mention the average gross debt maturity of 2.5 years and the 7.6% of average cost of debt, in line with the increase of interest rates worldwide and also reflecting the increase of the hat of local currency debt in core markets in Africa and Latin America, as you know, with higher rates comparing to Europe. Moving to Slide 20, where you can see serious results and the performance by each is unit and starting in Europe. We can see here that this division represents a very resilient capacity to growth namely in Portugal, that represents 69% of total turnover in Europe and with a stable margin of 80%. Also important to mention the positive expectation regarding relevant projects starting in the recent contracts awarded in Lisbon Subway and in Lisbon Hospital, but also the first 2 tenders of the high-speed trend, where we are fully convinced that the consortium led by Motegi and only with Portuguese companies will present a very competitive proposal for these standards. Regarding 2024 onwards, it's important to remind you the agreement closed at the end of 2023 in the Polish operation as already motes tossed with an enterprise value of EUR 90 million that we expect all the authorizations until the end of the first half of '24. Moving to Slide 21. And moving to Africa, we can see the double-digit growth in the main markets in the region that represents 62% of total turnover. As important to mention the improvement of profitability in this region with an EBITDA margin of 21%. Also important to comment with you that the risk mitigation scheme still very robust in Africa, considering that 98% of the contracts are financed by multilaterals or public guarantee by financial institutions. But important to look to the future and see the positive outlook for the region considering the backlog of EUR 7.1 billion. To conclude the C division, we move to Slide 23. And here, you can see – the -- performance in Latin America that showed a very impressive growth of 81% in turnover to EUR 2.75 billion, with Mexico representing EUR 2.25 billion of turnover, the main markets already in 2022 and now in 2023, but also with Peru with a growth of 23% year-on-year and Brazil more than double its figures of turnover in the year with these 3 markets with a very positive evolution. With backlog of EUR 4.4 billion and with relevant opportunities regarding the new shoring in Mexico, the infrastructure plan -- investment plan in Brazil opening a positive outlook in the region with a more visibility of unlocking value from the concessions in Mexico start in 2024. Moving to environment, and we already made an overview, important to comment that the turnover was down 7%, but mainly impacted with the reduction of the international segment in this business. And as we explained before, it's important to mention that 2023 was a transition year. As you all know, we have the conclusion of the transaction between the 2 shareholders that put these -- some of the new opportunities on hold to be -- have the positive evolution starting in 2024 with the total economy of model regarding the collection and treatment business, and we are fully confident that we will be able, as in the past, with more strength to implement a new cycle regarding waste-to-energy projects to leverage and maximize value from the existing assets. Moving to Slide 27. And for last here in the business overview, we can see here the positive contribution from Moten Capital and Max growth, 27%, as I mentioned to you, to EUR 134 million of turnover and EBITDA of EUR 12 million, reflecting the positive contribution from the services in mainly from the services business in Motegi capital and real estate projects in MAX. We will pass now to the Chapter 4 and to present the concession strategy to decide and for that, I invite Mr. Carlos Santos.

So thank you very much, Pedro. So as we've been mentioning in the last few months or last year, concessions is one of the important growth drivers that we have for the future. We've been having a long history and experience in terms of infrastructure concessions. And it has been an important driver, an important tool not only in the past in Portugal, but also in the recent years in Latin America, namely in Mexico. So with this slide, the most important message that I want to pass to you is that book value of our concessions, namely the Mexican concession that is the example that we are using here are undervalues undervalued when compared with the real value of the assets. And this is not a wishful thinking -- that we would like to tell you. But actually, this is make -- is made up with an asset test based on the recent market transactions where there is this value upside. But just to mention to you, we did transactions that are to be concluded with this sales that are to be concluded during this year that are waiting for the competition authority in Mexico that reflects increase or upside of 1.85x when compared with the book value of 3 concessions that are mentioned during the slide that is are open and also Toma Lipos. There's a concession in which we sold a small stake that has underneath value of 1.77x when compared with the book value that is -- the first one in that slide. And if we take a look into the concessions that are still under development that are still in the construction phase. And that, as you know, our policy, our strategy is to do to asset rotation, we can do an average between these transactions or transactions to happen in the short term to do an average of the -- what is the value when compared with the book value and see that we could have an average well of 1.81 that under covers more than EUR 100 million of even value of our book value only for the Mexican concession. So this is only to give insight that we are starting to materialize what we have been telling you in the last opportunities that we are building up a strategy for our Concessions portfolio in all our markets are in different regions. Just to remind you that we have concessions, not only in Latin America, but also in Europe and in Africa. And these concessions are important because of the 2 main reasons. One is because they leverage construction contracts and construction contracts with bigger margins because we are able to take or to grab differentiated opportunities -- and also, and most important with this message that I want to pass to you is that we are creating value. We are able to create value, and that value creation only plays, of course, when we do the asset test of selling to the market. But you can expect that in 2024, there's going to be an acceleration of this asset rotation, namely in Latin America, and we'll give you more updates in the next opportunities about what we think is our real value and that is over underneath the book value of our concession portfolio. Also, I would like to stress about Europe, about lines. As you know, Novo Banco that has been our historical partner in lines previously in -- as announced the sale of this stake of 40% to a new partner that is Serena. -- is a Spanish infrastructure fund. This transaction is waiting for the approval of several recent conditions, namely competition authority and also the authorization from the center. But the most important thing is that we business strategic partners that just to highlight you, Soren, is our partner in the Lisanari and the hospital concession that, as you know, we just signed the contract in January. With this new partner in Wines, we can, again, revive lines and also be a strategic toward new opportunities. And I would like to share with you that now Linea is in conditions to participate in the high-speed train projects through, as you know, is through concessions here in Portugal. We have built up Portuguese consorting of construction companies that we will also participate in the concession and also lines. So we will participate through to different ways through the consortium construction consortium in the concession company, but also through Lines now that we are to because the transaction of novos to be closed and that we have a new growth history towards more opportunities for the future. So I think this is important not only because there's a potential upside with this transaction that enders also is in value in lines, but also because lines now has a growth path towards the future. I will finish with -- before the Q&A round, I will finish with some final remarks and the outlook and guidance for 2020. So if you please move to Slide 31. Just some final remarks. We had a very strong commercial and operational performance in last year. We have a very sound and solid backlog that well anticipated and anticipates gives us visibility for the future revenue, not only for 2024, but also in years to come. But most importantly, this is a backlog that has the characteristics that we want bigger projects with higher margins and with a positive cash flow profile. Our activity is at record level with improved profitability. So this is a path that we want to maintain not only the growth that is not going to be so expressive this year, but the most important focus, once again, is to improve the profitability. We -- just like I mentioned, we revised our goals for our strategic plan last June, and we are already delivering some of the goals some of the targets, namely the ones related with the debt control. We want to continue to strengthen our balance sheet. So a focused strategy towards the generation of cash. We improved EUR 80 million year-on-year, our cash flow coming from operations, but we need to continue to do this towards the improvement of generation of cash to keep the both ratios that we have for that control -- under control. So as I told you, we are going to continue to be below 2x every year in terms of net debt over EBITDA, and we are going to continue to be below 4x every year in terms of gross debt over EBITDA. Also in terms of financial auto, we reached 10% double digits. That was the goal for 2023. But as I mentioned, we need to continue to do this track in order to improve the financial autonomy that as we've recently revised is going to be above 15% by 2026. Our investment was geared in long-term and large projects in gross CapEx was 76% of the total CapEx. That is an investment. It was very important, not only because we are talking about we're talking about contracts, gross contracts that are already -- that were already at the turnover and profitability. So we are contracts that are already being in operation, but also in terms of long-term contracts that we are talking about the waste treatment investment and also the industrial engineering, namely the contract mining. In terms of financial markets, we concluded the transaction with Urbaser, and now we can speed up what was foreseen in our strategic plan. We are waiting for the agreement from the competition authorities in order to conclude the transaction of Poland. We are expected to have these authorizations during the first semester of 2024. And we will continue our asset rotation policy in concessions with even more visibility during this year. So moving to Slide #32, in terms of some guidance for this year. We are going to have a turnover growth that is paving the way towards the EUR 6 billion target that we have for 2026. Our EBITDA margin will gradually grow in order to reach 16% on 2026, -- like I said previously, we are going to be even more selective when concerning our commercial policy to be very focused in projects that can enhance us in terms of profitability and as important in terms of cash flow or cash flow profile. We are going to be focused on organic cash flow generation. We are going to continue to strengthen our balance sheet and the capital structure organically and is expected to have during this year CapEx over sales of around 9% ratio. So to our stakeholders, to all our stakeholders. We are moving towards the targets that we announced for 2026 in a sustainable way with a sustainable growth in every aspect of the way financially speaking, but also with compliance with our sustainability policy. And just to finalize, the Board just propose the general meeting is going to be but on the 18th of April. The Board has just recently proposed a dividend per share of liver $0.12 per share. So thank you to all of you. And now myself and Jose Carlos, that here with me are available to answer to all of your questions. Thank you. Thank you.

Ladies and gentlemen, the Q&A session starts now. [Operator Instructions]. Our first question comes from the line of Miguel González from JB Capital.

I got 3. First one on CapEx. You invested EUR 117 million in concessions. I wonder if you could provide how much of this equity -- this CapEx is equity and whether the investment in Mexico is already through the year? And also related to transitions, -- my second question is whether you could provide an indication of how much equity you expect to deploy in the coming years for the concessions which are currently under development. And finally, regarding margins in net term, I guess, the strong margins delivered in the quarter are nonrecurring. So just to clarify whether this includes any capital gains for active rotations and maybe know what's your view on margin evolution in Latin for this year?

Okay. Thank you very much for your question. So Jose will answer the questions. If I understood there's 4 questions. Actually, I think it's for questions, but we'll try to all of them. And if any doubt is remaining, please kick in, okay?

Okay. Good afternoon, everyone. Thank you for being here with us today regarding the first question and the equity stake in this EUR 117 million of concessions. We are talking about 2 concessions. We are talking about ASPA and Frame store topic. And they have an average to ratio equity to that ratio of 30%. Regarding the concessions under development now and for -- in our order book for the next years, I would say that, that question would be roughly the same of around 30% to be committed in terms of equity to the following years. In terms of the margin for LATAM expected for LATAM, as Carlos was saying previously, when generating concession projects in Mexico, we are talking about generating better margin in our construction activity and on top of that, to add value when rotating the assets. So in terms of our expectation. And bearing in mind that the type of projects that we expect to participate in the near future regarding the near-shoring situation, which we are living now in Mexico, at least we are expecting more complex projects in terms of added value we expect as well, based on our budget to increase that margin again. So I would say that in terms of margin to be generated regarding these construction projects under a concession and concessions, it will be roughly the same. I don't know if you -- we answered all the other questions, I'm not sure because you also had a question about the assets --

No, no, no. You’ve answered, but some clarification maybe on the equity contribution for this year. You said just 13% of this $170 million is equity, right? So $50 million. Okay. So we should sell like EUR 15 million more in the coming years related to equity investment?

That will be fairly through. But I just like to stress to you that these 2 concessions that were mentioned, that is Permian ASPA are 2 concessions that we fully consolidate and our expectation is during this year, not consolidating anymore because we are going to sell and pick minority shareholders of the concession. So this is part of our asset policy that is not different than we have the asset rotation policy that is not different than we've been doing the last years. But of course, now with the bigger portfolio that has more visibility, but also it's going to give more visibility this asset protection policy because, as I said previously, most of them are going to be concluded and into operational part of part of during this year.

The next question comes from the line of Philippe Petremand, CaixaBank.

I have 3 questions, if I may. First one is related to Page 29, the slide on concessions and namely the Papua concession in Mexico that you mentioned that the transaction was already completely concluded. Can you tell us when the transaction was concluded if it was mix year 2024 or well in 2023? And if the EUR 76 million that you mentioned in the graph was effectively the cash in to Motegi from the sale of these specific assets? Same question in terms of CapEx and namely the CapEx on the long-term contracts and in the pathetic scenario of no new contracts awarding what are during this year. If we can see the CapEx of these activities still above EUR 100 million per year of we can see a significant decrease on CapEx of these long-term contracts? And last one, if you can tell us the amount of prepayments that you have in the -- in your balance sheet at the end of the year and not for reference purpose, the amount that you had in last year.

Philippe, thank you for your questions. I'm going to answer the one related with Pique concession and then Carlos will answer the one related with CapEx and one related to prepayments. So related to Quark, we did sold a small stake in the concession. So to answer your question, we didn't have the cash in of EUR 76 million. And this transaction was already concluded the transaction of the small stake was concluded in 2023 with this implicit value so 1.77x when compared with the book value, but I can share with you that during 2024, we're going to sell this concession. So it's going to -- it's a concession that is taking -- is becoming into operation during this year. And during this year, we are going to dispose the concession of Pique that we have a minimal target that is at least this small transaction of a small stake that we did still in 2023. I hope that I clarify your question. So considering long-term contracts, CapEx and the prepayments that Carlos will answer your questions.

Okay. Thank you, Philippe. Regarding the CapEx of the long-term contract, namely those regarding industrial engineering, I cannot hide that, of course, when having more contracts regarding this contract mining or industrial engineering. We are talking about, in one hand, long-term contracts, but high levels of CapEx. The good thing about these new contracts. -- with tier on clients, it's important to emphasize is that they have its peak of investment on the very beginning of the deal, meaning that we have to invest first and two, give the guarantee to the client that all our capacity and equipment means are there available to deliver the 24/7 operations during the maturity of these kind of contracts. But then, of course, we will collect later the turnovers and the EBIT coming out of these transactions. This year, 2023 was especially a year in turn -- a good year in terms of signing new contracts to Tier 1 clients, talking about the extension in our project -- contracts in South Africa for Vedanta, which is called the Gamsberg mine. And another 2 in name Lapageand Seguela in Ivory Coast for Indiveral rock gold and the new one in Senegal called Botto project for Managem, again. Of course, with no new contracts regarding this industrial engineering, we could expect if it was the only contribution not to have this level of CapEx and 23 was affected by -- positively affected by the signing of this context. But we have to look at the other activities that we have here in our business conglomerate, let's say. First, the environment sector, namely EGF, in which we have a model on -- with revenues on assets basis. So the more we invest, the more we collect through tariffs. So that's why we improved -- we have conditions in 2020 to improve our CapEx in order to collect and to invoice more. And regarding the concessions, I cannot hide as well that being a strategic arm of our activity. The more we invest, the more the CapEx we will need to support this asset creation in order to add value on Rodak. Going to the last question regarding the advanced payments. We had an evolution regarding the advanced payments of EUR 131 million, coming from EUR 93 million in 2022 to EUR 1.62 billion in 2023. But the thing that I would like to emphasize here is that every advanced payment that we collect, they have a specific purpose, but on 2 many things. The first one, a more, let's say, aggressive procurement strategy with which we can control the price changes when buying the materials goods, et cetera. And when needed, the acceleration of our works under execution in order to comply or in a better sense to anticipate the execution tenure of each project, which means that we are saving costs. So there is no advance payments related with nothing affecting specifically the net debt because when we collect, we have to apply them. And if you look at the evolution of the payments to the suppliers, they will see where they are applied and the performance of our projects to reflect that margin as well.

Okay. Thank you, Philippe. I don't know if you've been clarified.

Yes, yes. Perfect.

Thank you.

And next question comes from the line of Artur Amaro from Caixa Banco de Investimento.

I have 2 questions, if I may. The first one relates to the environment business. Just to clarify that the revenue decrease and the EBITDA decrease was related with this investment of international activities. A subsequent question related to this, there's an order book of EUR 300 million. How much of this is Portugal and how much of this relates to international activity? And the last question, if I may, relates to the concessions and to lines as far as I am aware, in the -- in the first half on the report, the consolidated accounts you have on the balance sheet, EUR 87 million related to the 60%. Now you say EUR 79 million, so it's more or less the same. I don't see any line in this table related to Lusoponte. Is it possible to have an idea of how much is the book value of Lusoponte? And these are my questions.

Okay. Artur thank you for your questions. So concerning the first 2 questions, that was about the environment business. The performance in this year of 2023 was worse than 2022, basically because of 2 reasons. First of all, it's because on 2022, we have a better than expected or better than the average performance mainly in the international activity and namely in Angola. So during 2023, I would say that was not a worse performance in Angola, but was, let's say, an average performance in Angola with a decrease of activity that impacted when you compare 2022 with 2023. Also, another reason that was explained by Pedro has a little while ago. 2023 was a transition year. We did only the transaction of Urbaser was only actually closed in the last phase of 2023. So it was a transition year in which we already sold, but we didn't conclude the transaction. And with some of the key decisions, namely some implementation of commercial and strategic decisions were not able to occur. And of course, that didn't allow us to be as agile and as sound as we wanted to do in terms of management. Nevertheless, that is overcome. We are now the owners of 100% of the stake, and we can expect for this year to start to implement and to have the positive contribution of several synergies that we want to make, not only in terms of simplification of our structure, but also some savings that we want to have in terms of overheads and in terms of the efficiency of our operations and more detail or more profound integrations with the back office of Martino Group. Concerning the second question, that is about the order book, the EUR 300 million that is expressed, just let me remind you, this is only for waste collection services. So there's no value here concerning EGF activity, we do not account for the backlog. Any turnover coming out from concessions, not only in environmental concession, but any kind of concessions. But to answer your question, is EUR 115 million of this order book, EUR 115 million is for Portugal market, Suma and EUR 185 million is from international markets that, as I -- just to recall, we're talking about Brazil. We are talking about Angola. We are talking about Ivory Coast. We are talking about Oman a little less contribution coming out from Mozambique. So this is the contribution for international and Portuguese activities towards the backlog of EUR 300 million. Concerning lines, your question was if our -- what is our book value if it's 86% or 79, the book value that we have for Linus for our stake is BRL 79 million by the end of 2023. And I'm sorry, but I will not disclose what is the composition between the Lusoponte-book value and the other -- Okay -- I'm sorry for that.

No, no problem. So just a quick follow-up, Carl, if I may. So when I look at your accounts on this EUR 76 million -- EUR 79 million. I don't have the breakdown, as I have the breakdown of the half of the year, when I told you about the 87. I see several lines there, PP, several concessions in Latin America. I see Mota-engil, the stake in Mateer, and then I align others. My question is the user point included in these others? Or I'm not looking at the right --

Los point is included in the line that is concerning linear. So Lozon is under lines. So when you see others, you are not looking at Lozon.

Okay. That's clear. So this EUR 11 million, it's different. It's a different --

No. Fortunately, it was open to worth a lot more than 11 million --

I know. I did my back of the envelope -- And -- and I reach a completely different figures. I was just clarifying that Lozon was not under this line, very clear --

It is not under this line -- the sound is under lines and the book value by the end of December 2023 was of EUR 79 million in terms of book value. But you will have some more highlights on the -- what is the potential underneath value of linear when the transaction of Novo Bank is concluded.

Yes. Just to finalize my intervention. There is a news from 2022 that at late sold the 17.21% to Matt lineage and to Vencor EUR 54 million. So by applying some proportion, of course, you get a different valuation and a much higher valuation for Lozon. Very clear, Karl.

Okay. If you want to -- also that we can explain or elaborate a little bit more on that transaction that was occurred was open, but I think we cannot elaborate in a direct answer from Pedro to you -- of course, plan. Thank you.

[Operator Instructions] And our next question comes from Michail Paraskevopoulos from Buck Wealth.

It's always a pleasure to be on this call, as you know. First of all, congratulations for the astonishing results. My question is very straightforward. I've noticed that minority interest charges in the P&L increased significantly. I suspect it comes mostly from Nigeria and Mexico. But I would like you guys to confirm if you can.

Always nice to hear, today, you didn't ask the question about prepayments because someone was ahead of you. So you have a different question. Sean is going to answer the question about the mine R&D interest. It's good to hear. Thank you. Thank you, Jan. -- it from you. Regarding the minorities, of course, in a year with a major contribution from Mexico, Nigeria and Angola as well. It is right to you, and it's true that you are right that you come from that on those tractions. Thank you everyone.

There are no further questions from the conference call at this time. I hand over back to you. Thank you.

So this is, again, Carlos. If there's no more questions, we are always available to answer further clarifications and further questions that you might have through Pedro and through Maria and hope to meet you soon personally. And thank you for attending the call and see you. Thank you. Bye-bye.