Petrofac Limited (PFC) Earnings Call Transcript & Summary

Good morning. I'm delighted to welcome you to today's half year results presentation. I'm Sami Iskander, Group CEO, and I'm joined today by Afonso Reis Sousa, our CFO. We will both be happy to take any questions you have after the presentation. This is our standard disclaimer. Please read it at your leisure. Before we get into the details of the results, I would like to highlight 5 compelling reasons why I believe we have a unique opportunity to unlock significant shareholder value. Firstly, the catalyst for this conversation is the resolution of the SFO investigation. This is now behind us. And today, we have launched a comprehensive refinancing plan that will support our growth ambitions. Secondly, we still have the best Middle East-based EPC delivery machine capable of delivering best-in-class project execution, sector-leading margins and strong cash flow generation. Thirdly, we have a refocused company, a new management team and an organization aligned behind the strong growth strategy that is supported by clear ESG commitments. Fourthly, the timing is excellent. We are positioned locally in very attractive growth markets and see a multiyear up-cycle ahead of us, both in our traditional businesses, and in our growing new energies business. And finally, we see a clear path to return to a $4 billion to $5 billion business, producing sector-leading group EBIT margins of between 6% and 8% through consistent best-in-class delivery. These 5 reasons underpin my confidence in our ability to unlock significant shareholder value. Turning now to the settlement of our legacy SFO investigation. This lifts an historic cloud, which we've operated under for 4 years. During which time, we have made great progress to overhaul our culture and put compliance at the heart of everything we do. This progress was both recognized and considered by the judge in determining the GBP 77 million total penalty, which comprises a confiscation order of GBP 22.8 million, payable by the 3rd of January 2022, and the balance payable on the 14th of February 2022. I am confident that today, we have the right systems and controls, and importantly, the right culture and behaviors to place us amongst the best in our field. The impact of the SFO investigation constrained our ability to compete for new awards with some of our leading and key customers. With this burden removed and the changes we have made, we look to the opportunities ahead with confidence and excitement. We have engaged widely with stakeholders from clients, partners to lenders and stakeholders. The feedback has been overwhelmingly positive. You have seen that we also announced today the launch of a comprehensive refinancing plan to create a long-term sustainable capital structure, including a $275 million equity issue through an underwritten firm placing and open-offer launched simultaneously this morning as well as $180 million revolving credit facility, $50 million term loan and a $500 million debt bridge to bond. Supported by this robust long-term capital structure and a reformed reenergized organization, we are well placed to capitalize on the expected increased activity levels over the coming years. With that, I'll hand you over to Afonso, who will take you through our financial performance in the first half.

Thank you, Sami, and good morning, everyone. Our results for the period ending 30th June 2021 continue to reflect the constraints of the pandemic and what has been a challenging period for Petrofac and for the industry as a whole. COVID-19 continued to disrupt project schedules, increased project costs, delayed tender awards and impact commercial settlement discussions. We reported group revenue of $.6 billion, down 24% on the same period last year. Business performance net profit increased to $39 million, reflecting strong performance in EPS. Overall, we reported a net loss of $86 million, largely due to the court imposed penalty of $106 million which concluded the SFO investigation into the company. We have continued to take proactive action to mitigate the impact of the current unprecedented market conditions. We're structurally reducing costs and remain on track to deliver $250 million of cost savings compared to pre-pandemic levels by the end of this year, and we continue to conserve cash to maintain liquidity. Group backlog declined to $3.8 billion, principally reflecting low new order intake in E&C as clients continue to defer awards in response to the pandemic. The Board recognizes the importance of dividends to shareholders. However, in view of current market conditions, it has decided to continue the suspension of dividend payments and does not expect to resume them until there is a sustained recovery in new order intake. So let's look at the first half results in a little more detail. At the group level, the decrease in revenue largely reflected lower activity in E&C and prior year asset sales in IES. This was offset by strong performance in our EPS business unit, which continued to deliver good growth through the downturn. Business performance EBITDA reflects the lower revenue as well as changes in project mix and higher project cost in E&C, again partly offset by the strong performance in EPS. Consequently, group EBITDA margin reduced to 5.1%. The group recorded a business performance income tax credit of $6 million in the period due to the release of tax provisions in E&C, taking the effective tax rate to a negative 18.2%. Net margins improved in both E&C and EPS compared to the same period last year, resulting in business performance diluted earnings per share increasing 85% to $0.115. At a divisional level, adverse market conditions continued to impact Engineering & Construction in the first half. Revenue fell 32% to $1.1 billion, in line with guidance, reflecting lower project activity and the previously disclosed rescoping of the Sakhalin contracts. Engineering & Procurement returned to pre-pandemic levels of progress, and whilst Construction continued to be impacted by travel restrictions and safety protocols, we continue to deliver successfully for our clients, achieving several key milestones across the portfolio during the period. Net profit fell 17% to $29 million, as anticipated, reflecting lower revenues, a higher overhead ratio and higher costs on [ some ]. As you can see from the chart, net margin increased from 2.1% to 2.6%, marginally above previous guidance, driven by a decline in the effective tax rate following the release of tax provisions in Oman and Turkey. This more than offset the changes in project mix and a higher overhead ratio. First half order intake was, of course, impacted by our exclusion from bidding in the UAE as well as delays in deferrals of awards by clients in other markets. Since the period end, we have secured a strategic $100 million project in Libya, and we are well placed on a number of other opportunities with bidding activity noticeably increasing in a more supportive commodity price environment. Our reimbursable Engineering & Production Services business grew strongly in the period, driven by higher activity and good cost discipline. Revenue increased by 24% to $526 million, with growth in both the operations and projects segment. Our FEED work on the Erawin project in Libya conducted by our EPS office in Woking translated into an EPC contract for our E&C business unit, demonstrating that our life of asset offering to customers is gaining traction. EPS has worked on several other FEEDS, which we hope will similarly translate into full EPC contracts going forward. In new energies, we have seen a significant ramp-up in activity with FEED and pre-FEED work being performed across our targeted sectors, which Sami will talk more about later. Again, our expectation is that several of these opportunities will lead to full EPC opportunities in the future. EPS' profit net increased 100% to $34 million with net margins increasing to 6.5%, reflecting the increase in brownfield contract margins and a lower overhead ratio. EPS also benefited from a nonrecurring increase in income from associates of $2.5 million. EPS secured over $400 million of new orders in the period, representing a book-to-bill of 0.8x. Order intake since the period end has been healthy, and EPS is on track to deliver a book-to-bill of at least 1x for the full year. Moving on to our Integrated Energy Services division, which has significantly reduced in scale in recent years as we transition back to an asset-light model in which, following the sale of our Mexico operations, today comprises only our interest in the PM304 upstream asset in Malaysia. On an underlying like-for-like basis that is excluding exited assets, revenue of $15 million was down 34% on the prior year as a result of lower production following unplanned outage on the main Cendor field partially offset by strength in the oil price. EBITDA was $4 million, down 70% on a like-for-like basis, reflecting lower revenue and an increase in operating and other costs. First oil was achieved on the East Cendor development in June 2021, and peak production is expected to be reached by the end of the year. From 2022, IES is expected to generate net profit and be free cash flow generative. Turning to the balance sheet. DSO increased to 214 days in the period, primarily due to longer billing cycles due to delays in reaching invoicing milestones as a result of COVID-19 disruption and slower payment from clients. This was partly mitigated by an increase in the DPO in the period. As flagged back in April, the increase in DSO is a timing issue, and we're not currently concerned about our clients' ability to pay. We expect this position to improve into 2022 when commercial settlements are closed out and overall net working capital will improve as new projects are secured. In cash terms, cash conversion was impacted by the decline in EBITDA and working capital outflow. However, lower tax and interest payments, together with actions to conserve cash, partially mitigate the impact. The $43 million of other cash flows includes payment of previously accrued long-term employee benefits as a result of rightsizing the business. Together, this resulted in a free cash outflow of $51 million and net debt of $188 million. We'll come to talk about how this has evolved post period momentarily. But first, let's turn to capital structure. Today, we are pleased to announce a comprehensive refinancing and equity raise to establish a stable long-term capital structure that will best position the business to pursue its growth strategy for the future. The refinancing includes a $180 million 2-year revolving credit facility and a $500 million debt bridge to a bond. Furthermore, a $90 million term loan, which is due to mature in April, will be repaid and replaced with a new 2-year $50 million term loan. We have also today announced a $275 million equity raise to strengthen the balance sheet in support of our plans to grow the business and unlock significant value for shareholders over the coming years. This provides us with a pro forma net debt of $172 million and pro forma liquidity of $0.6 billion, which is adjusted for the planned early repayment of the COVID corporate financing facility as well as a seasonal increase in net debt in the third quarter. With our asset-light business model, this capital structure provides a robust platform for Petrofac to rebuild its order book and deliver attractive returns as we reshape and rebuild the business. Looking towards the full year outlook. E&C is on track to deliver net profit margins in line with 2020, reflecting a slow period for awards in the first half. However, since period end, we have secured the Libya project, and we are well positioned on several projects due for award in the near future. EPS is on course to deliver a full year net profit margin of 5% to 6%. Order intake has been good. And we expect it to deliver a book-to-bill of at least 1x in 2021. The increase in net debt in the third quarter to $371 million was in line with the company's expectations, albeit exacerbated by timing of receipts on certain projects and a low number of new awards in the E&C division during the quarter. However, as mentioned in the previous slide, following the refinancing, pro forma net debt will be $172 million. I should also highlight that we remain focused on costs and are on track to deliver $250 million of cost savings by the end of this year, ensuring that we're right sized to the current business volumes and maximizing cost competitiveness. Overall, for the group, bidding activity is increasing, and we are encouraged by the strong macro backdrop and positive feedback from clients, following the SFO resolution. With that, I will hand you back to Sami.

Thank you, Afonso. So with the same set, here's a strong platform we have in place today. This is a business of scale. We remain a leading energy service company with a strong operational track record with more than 200 major projects delivered and 16 currently in execution. We operate in a range of markets and across the entire asset life cycle from design to decommissioning with a leading 40% market share in the U.K. operations and maintenance space. 2020 was a quieter year, but we still clocked up more than 6 million engineering people hours and more than 112 million construction people hours, all with a strong safety record. Our global procurement network across 29 countries helps us assure delivery, lower execution risk and deliver in-country value. Our investment in subject matter experts is worth highlighting. We have continued to invest in and grow our technical experts. They are critical to our success and will support our pivot to new energies as we grow our activity in wind, carbon capture and storage, waste-to-value and hydrogen. I'll spend a few moments highlighting what's totally unique about our offering and how it drives value creation. On the left, you can see what makes us different: our unique EPC machine that benefits from long-standing deep client relations, a track record for execution excellence and an unrivaled position in the Middle East. If there is 1 word that encapsulates our differentiation, it is local: local identity, local procurement, local delivery, local leadership. We are the only EPC company with centers of excellence for engineering in the Middle East and the highest percentage of spend through our local supply chain. Through repeat projects, we have honed our long-standing partnerships with local subcontractors who understand the local operational environment and the performance and ethical business standards we expect. The right-hand graphic shows how this formula has driven repeat business in countries like Oman where around 70% of gas infrastructure has been built by Petrofac or Kuwait where Petrofac built infrastructure supports approximately 35% of the country's oil production. All this lowers execution risk and assures delivery, protecting and enhancing margins in the process. We take the EPC risk, but through our meticulous local approach to execution, we drive a differentiated return. Here on this slide, you can see our EBIT margins delivered in E&C over the past decade against those of our direct peers. This is what we mean when we talk about sector-leading margins. Let's turn now to EPS. Our EPS reimbursable business is a low-risk business that's proven underlying resilience against the extremes of investment cycles. It's a one-stop shop for clients seeking certainty for the management, maintenance, integrity and performance optimization of that asset across its life cycle. We're a market leader in the U.K., and we've been steadily exporting this expertise internationally, with 50% of the revenues now coming from outside the United Kingdom. Our skills in this area are increasingly sought after, not only by existing and new customers, but also by prospective new energy customers who value our operations and maintenance know-how and want us to apply it to their projects. The ingredient that underpins successful local delivery is our people. This is really something that makes Petrofac stand out. This diversity offers a level of cultural alignment to our customers, the value of which is difficult to measure, but I know how important it is. It plays to partnership. We are very deliberate in driving our HR strategy to hire and retain the best local talent and match our customers' [ footsteps ]. That is the platform we have today. Each of the future is how we use it. And we put significant time this year into rebalancing, reshaping and rebuilding to best position us for the future. Resolution of the SFO issue has cleared a major impediment to the recovery of the business. Today, we have outlined the plan to underpin the long-term strength of the balance sheet, and we have rebased the cost structure without sacrificing our core capabilities. We have rebalanced the business and have a solid platform for growth. As I have previously mentioned, we have wasted no time in reshaping the business to hone our efficiency and assure our execution through our 1tec technical excellence program and a new value assurance process. And the dedication of our dedicated new energies team under an experienced Chief Operating Officer, John Pearson, that team has had an excellent start with 14 FEED projects, front-end engineering and design projects, secured to date in 2021 and a $7 billion pipeline of opportunities for 2022. As we pursue growth in new and existing markets, we have hired new talent and created dedicated country organization roles to be more customer-centric in our key and target markets. I'd like to touch on how we integrate ESG into our business. How we do business is as important as why we do business. Our ESG agenda has support and focus from both our executive team and our Board. We have this year established carbon management teams to drive practical changes that support our decarbonization ambition. Work is underway to assess our Scope 3 emission baseline as we look to decarbonize our supply chain, and we will set emissions reductions target based on climate science, a science-based target initiatives. Our social agenda is driven by people-first principles of safety, human rights, and localization that support a diverse and inclusive environment. During the pandemic, we have been able to support local vaccination drives and provision of oxygen ventilators in several countries as a practical contribution to the fight against COVID. Governance is enshrined in our continued commitment to the highest ethical principles, supported by a culture of integrity, transparency and trust. I would draw your attention to the 40% of management incentives that are linked to ESG performance measures. Our ESG activity is in pursuit of several long-term milestones related to our net zero ambition by 2030, diversity and governance. Our progress this year has been recognized externally through several independent rankings, where we are industry or sector leading, as you can see from the slide. Now we look at significant growth opportunities we see ahead. After 2 very fallow years for capital investments, we are on the verge of an exciting resurgence in investment spending in our core markets, new markets and new energies. From this, we have a group pipeline of $46 billion, and which you'll see has grown from the $20 billion I referred to in April. Although they are slightly different time frames, it shows the level of opportunities we see coming at us. In E&C, we have a $32 billion pipeline and the recovery is coming in 2022. In EPS, we have a $14 billion pipeline, and the contract flow today already supports a book-to-bill of 1x or more in 2021. And opportunities in new energies are accelerating with the pipeline I referred to earlier at $7 billion. In E&C, 30% of the pipeline is in our long-standing core markets of Algeria, Kuwait and Oman. Elsewhere, in India and Russia, we have ongoing projects and a growing track record and expect to expand through our recently signed strategic partnership with Gazprom. We've previously operated in Kazakhstan, and it is familiar to us. We are back in Libya after several years with a recent EPC win. And this market is expansive. And finally, offshore wind in which we have a decade of experience comprising 50% of our new energies pipeline. Even with a conservative view, on likely win rates and average margin, this picture translates to attractive profitable awards for Petrofac in 2022. We and a very strong platform from which we can grow meaningfully over the next 5 years. Let me emphasize again why this is exciting and why we're confident. We're entering a period of growth that will prove transformational for the value of this business. 2019 was not a stellar year, but it was the last normal year pre-COVID with 33 projects awarded. Because of the lack of awards seen in 2020 and 2021, we see a wave of projects ready for sanction in '22. The orange bar on this slide depicts our best estimate of nearly 40-plus projects from our pipeline that we consider likely to be awarded in 2022. Clients want to move forward with these projects. And as the market starts to unlock, the focus will be back on securing capacity with competitive contractors with a proven track record. From this pipeline, in these geographies, I am very confident in our ability to rebuild our E&C backlog. I'd like to look a bit closer at Kuwait among Algeria opportunities. We have a pipeline of about $10 billion in those core geographies. They have constituted 65% of our revenue from 2014 to 2020, and contributed significantly to our margin. They have proven to be the standout market for us in recent years. We have enjoyed an above average win rate of between 30% to 50%, thanks to our unrivaled track record and best-in-class delivery. This is not to say Saudi, the UAE and Iraq are not attractive markets for us. They very much remain so, and we hope and I expect to reenter these markets shortly. Turning to EPS, where growth prospects are similarly healthy. At $14 billion, EPS has been a very dependable business in the last 18 months and has proven its underlying resilience. Over half the pipeline is brownfield project work, where we have been steadily growing our credentials in recent years. More than half of the pipeline is also outside of the United Kingdom, as we export a gold standard North Sea skill set and track record to clients around the world. Turning now to the opportunities in new energies. New energies are key to our future. Our objective is a $1 billion revenue business in the medium term at attractive margins. Long term, we have every confidence it will be much bigger. We have been very focused on our strategy. We are very deliberately not trying to be everything to everyone in the space. However, there are 4 very big areas where we are already playing in a meaningful way and where our skill set and capabilities will give us the edge. Combined, these give us our $7 billion pipeline. The chart shows the growth trajectories of these segments in which we are already taking positions. Offshore wind, a market driven by European demand that is set to quadruple installed capacity by 2030 and increase at more than tenfold by 2050 and where we have a 12-year track record. Carbon capture, a sector we've been tracking and supporting as a business for more than 10 years, where we expect growth in storage capacity to grow from nascent today to 7,000 million tonnes by 2050. In this sector, we see a proliferation of opportunities. In storage, capture, transportation, where we have the pipeline, subsea, well engineering capabilities to support the thousands of emitters, thousands of emitters across Europe who will need CCUS or CCS to decarbonize their operation. This is a huge and emerging play for our key and core EPC skill set. We have already taken strong early position in waste to value and hydrogen, which today are promising emerging sectors and where you can see from the bar chart the growth projections are compelling. In carbon capture, waste-to-value and hydrogen, we see an influx of well-funded nimble project developers, entering the market who value our life of asset service offering, our safety case expertise and the innovative commercial models we can deploy to support their projects. All these markets have extraordinarily growth potential. Petrofac has a skill set applicable to all of them, and together with the growth prospects I have outlined in E&C and EPS all underpin our clear growth strategy. And I hope our detail behind these objectives demonstrates why we are confident that this is achievable, and I would hope even conservative. By 2025, we have an ambition to deliver $4 billion to $5 billion of revenue, with over 20% of this coming from our growing new energies business. And through consistent best-in-class delivery, we have the ambition to return to delivering a sector-leading group EBIT margin of 6% to 8%. We have delivered an average margin higher than this over the last decade and believe there is further upside potential in the future. Finally, our asset-light business model we expect to return to a net cash position and ultimately reinstate a sustainable dividend as a key element of a disciplined capital allocation framework. I think, I hope we can agree that the business presented on the slide is worth significantly more than Petrofac value today. So to summarize. Now the legacy issue -- SFO issue is resolved, we are unburdened in our pursuit of growth. The platform is in place. We have world-class capabilities and a long track record. Petrofac is refocused and reenergized behind new management and a new strategy. The time is right. Our markets are waking up after a dearth of investment in the past few years, and we see a sustained period of exciting growth ahead. I am very confident in our medium-term objectives, which will be transformational for the value of the business over the coming years. And with that, I'll thank you, and I'll open for questions for myself and Afonso.

[Operator Instructions] The first question in the queue is coming from the line of Nick Konstantakis from Exane BNP.

It's nice to see that you're pulling all of your -- there's a full staff behind you, you can focus on running the business. So well done. I've got a few, please. So can you just give us some color on the discussions you're having with customers? Just trying to understand what is a reasonable assumption of returning on Iraq, Saudi, UAE. I'm just reading the Chairman letter or even your $4 billion to $5 billion ambition for top line, it doesn't seem to be including those. So can you just give us some color there? And then secondly, I do have a question on margin. Can you please help us understand what's -- which conditions do you need to hit the top end of these margins? Maybe it's an assumption in the mix or your new competitive cost structure. It's just -- it's been a while since we've seen 8%, and that was in a materially higher top line. And I guess within that, do you assume any degradation in the new energies margins, which is obviously very competitive at the moment? And then lastly, I'd just like to understand why do you choose that form of equity raise. Did you consider maybe a rights issue? Or any color you can give us around that in the discussion with your shareholders would be very, very appreciated.

Very good. Thank you for your questions. Let me maybe start with the -- your comments around the SFO and the customers and so on. Firstly, I'd like to say that today, we are still operating in Iraq, the UAE and Saudi Arabia, clearly on projects that we won in the past, but our teams are still on the ground and are still sort of in country. And I say post the, obviously, the pleas and the sentencing, I have spoken to every single customer we have personally. And clearly, I've spoken to the leadership of Iraq, Saudi Arabia Aramco and ADNOC and personally met with the leadership of ADNOC a number of times. And I'll tell you the following. We are still considered one of the best or even the best player in the E&C field, not only because we're part of the supply chain of those customers that I just referred to, but we are part of the supply chain of those countries. When I talk to the clients, all of them, but particularly the ones you referred to, I talk to them about a few things. I talked to them about what happened, obviously. I also talked to them about why this cannot happen in the future, and why am I proud to lead this company. I talk to them about the systems we have in place, sort of we say best-in-class, but what does it mean. I talk to them about the people not only the ones who we -- have left us, but also the new people we brought in and I brought. I talk to them about our processes, both our financial controls, governance controls, our code of conduct, our 0 tolerance to any violations. I talk to them up the technology that supports these things and also talk to them about independent third-party assurance that is sort of alongside our compliance process. And I mean this is really -- I talk to them about what does best-in-class mean. It's a little bit more than words. It's people, it's processes, the technology. It's that independent assurance. And this does resonate with all of them, I mean, and did resonate with the countries I spoke -- you asked about. My feeling, and I don't -- I'm not going to say a date or a time, Nick, but I am absolutely convinced and I hope I can convince you through my words that we will be returning to bidding to these markets soon. As I said, I've met with the leadership. I've spoken to them. I've explained who we are today. And this, obviously, does resonate. It's not something that I can tell you in the next month or next 2 or whatever, I'm not going to go there, but I am absolutely confident that we will be back to these markets shortly. On your coming 2 questions, I'll ask -- maybe I'll say a few words and ask Afonso to help me. First on the 6% to 8%. We have 2 sides of the business, and Afonso also described them in quite a bit of detail. But today, on the EPS business -- in the EPS business, we are delivering margins consistent with those levels. So this is not sort of some ambition that we have. This is actually we're delivering today on the EPS side of the business and well on our way to do that, as Afonso said, in a business that is having a book-to-bill above 1 and progressing. What I'm -- our E&C business has suffered, and that suffers from a number of all events. A, the SFO, clearly. I mean I don't need to go through that. Clearly, COVID has had an impact on the capital spend, and I tried to show you the slide to show the decline in capital spend, and therefore, our ability to win work and you can see it in our backlog. Today, we are bidding consistent, consistent with those margins. And I'm not going to talk about -- when we spoke about the Libya contract, there is another announcement that I hope we'll be able to make shortly around the win in the E&C, and I'm not going to go where exactly, but very shortly. It's all consistent with these margins. And I believe that the conditions, this up-cycle is -- sets us up in a really good place to start -- I mean, the industry, but certainly, a company like us where we are absolutely not -- we're not focused on building backlog. We're focused on building backlog and generating margins. So it's a bit of our desire. I know this is sort of you have to see it in the future. I understand that, too. But I can only tell you what we're doing right now. And maybe on that point, maybe if you want to expand, Afonso, on the third point around the why we came up with the structure.

Sure. Very little to expand, I think you've covered it, Sami. It's what we're doing. It's not just consistent with our history, but it's consistent with the -- what we're doing today. So that -- I think that completes the answer. In terms of the structure for the fund placing and placing an open offer, essentially, this was driven by consultation with our underwriters, JPMorgan and Goldman Sachs. And essentially, it's driven by the composition of our share register, and in particular, the fact that we have a fairly large tail of retail investors that typically will not participate in the rights issue. So it's an opportunity to ensure that we can bring in a group of new investors or perhaps historical investors who are interested in rejoining the register and who can be obviously allocated a firm placing rather than risk having to call back later on. So both the protection against the retail investors and also to bring new shareholders into the register. And we've conducted a road show, and it's been fairly well received so far.

The next question in the queue is coming from the line of Kevin Roger from Kepler Cheuvreux.

The first one is a kind of follow-up on the opportunities that potentially you could have on the countries where you have been, in a way, blacklisted recently. So I was wondering if you can provide us a bit of sensitivity on what will be the pipeline on your side, if you include Saudi Arabia, Iraq for 2022 if you have the number including those countries? And the second one is related to the refinancing plan. So you set up a new revolving credit facility. The amount is much lower to the one that you have in place currently, something like [indiscernible] maturing in June 2022. So I was wondering if you can explain us what's beyond this strong reduction in the amount of the revolving that now you will have to pay.

Perfect. Thank you, Kevin. Thank you for your questions. Maybe I'll start with the first one. And what I try to do, obviously, not very successfully is to tell you about the level of opportunity in front of us without the UAE, Saudi and Iraq. And again, I'll repeat, I mean, my expectation -- my belief and my expectation is we'll be back to these markets shortly, having met with their leadership. But there's a massive amount of opportunity in front of us represented in the slide, which I tried to show, the $14 billion on EPS, a book-to-bill more than 1x, i.e., a business that's over $1 billion and growing year-on-year; and the $32 billion of E&C opportunities in front of us. So maybe -- I mean, rather than focusing on the blacklisted countries, as you refer to them, I don't like that word, but anyway, using your words, let me tell you where that $32 billion is. And if you could remember sort of the slide I showed you in Algeria, Kuwait and Iraq where we have 30% -- or had in the past, the 30% to 50% win rate, and I hope the past tells you something about the future. But anyway, Algeria is coming back to the markets in the first half of the year. Algeria was I wouldn't say barren, but certainly not many projects in the last few years, sort of that's the impact of oil price and COVID. Algeria is back to the market and a number of projects, both in actually many -- several in H1 and we have a few in H2. Kuwait is coming back to the market towards the second half of the year. Oman is coming back to the market towards the second half of the year. Russia, we just signed an alliance with Gazprom, and I'm confident we're going to start seeing sort of EPC opportunities -- they're brownfield opportunities, but EPC opportunities towards the end of Q2 and maybe greenfield towards the end of the year. Europe and -- I mean, we're on a number a number, and if I say off the top of my head, we're talking about 5 or 6 opportunities in H1, some of them in Q1 of 2022. I'll actually share with you the less good news as well and maybe kind of tells you a little bit of our mindset. India is quite big in the pipeline in '22, I mean maybe to the tune of $4 billion out of those $32 billion. But it has been the same, I mean, very similar in 2021, but we have not been successful. And we have not been successful really building on what I told Nick a little bit earlier is because we are bidding in line with the margins. If we're not bidding to increase backlog and have a number leading to increased backlog yes, that backlog will deliver an EBIT margin. So there is -- it's not -- we're not -- how can I say this, Kevin, I mean -- and I need to be balanced. On one side, there are a lot of opportunities in front of us that make me really excited about 2022, and there are in the places I just mentioned, and they're not 1 or 2. They are many. I am confident that we will -- what you will see from us in 2022 is a significant, and I mean significant increase in backlog in E&C, significant. I also wanted to mention this. I'm not trying to get the -- sorry to interrupt you. I'm not wanting to get the message that we're not focused on coming back to the UAE or to Iraq or to Saudi Arabia. Absolutely, we are focused. But I think for prudence and until it's done, I don't have it there. But the opportunities are there in the countries we -- I just mentioned. Sorry, I interrupted you, Kevin.