Saipem SpA (SPM) Earnings Call Transcript & Summary

Good morning, everyone, and welcome to our virtual Capital Markets Day. My name is Max Cominelli, and I'm Head of Investor Relations at Saipem Group. Our speakers for today are Mr. Francesco Caio, our CEO; and Mr. Antonio Paccioretti, our CFO. We are also joined at the venue by the heads of divisions, our General Counsel, Mario Colombo; and colleagues of Financial Planning and Reporting. We will open today's session with a review of the 9 months 2021 results by our CFO, followed by the presentation of the new strategic plan by our CEO and financial targets by the CFO. Today's presentation is available on our corporate website. After the presentation, we will have ample time to answer your questions in a Q&A session. We will take questions by phone first. And after that, we will also go through a selection of questions received from the webcast. Finally, let me remind you that this event is scheduled to end by 11:45 Italian time. And now let's begin. [Presentation]

Good morning, everyone, and welcome to our Capital Market Day from me as well. After a first half -- weak first half, we started seeing some signs of improvement during Q3 across the board, leading to a quarter-on-quarter revenue increase of 18% and an EBITDA improvement of EUR 329 million compared to the second quarter. Unfortunately, in E&C Offshore, we still had some impact from wind farm projects, leaving group Q3 EBITDA adjusted slightly negative by EUR 25 million. In particular, drilling continues showing signs of recovery. Our offshore drilling fleet is almost fully under contract, which is historically a leading indicator of a new investment cycle in the traditional oil and gas business. Drilling onshore, as anticipated, gradually improved utilization for Q3 and particularly in Middle East, where some suspended rigs restarted in the quarter, while some other will start between Q4 and the beginning of next year. These positive signals were visible in Q3 with EBITDA adjusted for both drilling divisions, combined of EUR 54 million, trending better than expected. In the first 9 months, group revenue were down by 6%, and adjusted EBITDA was negative at EUR 291 million. Business environment was still conditioned by pandemic, reflecting our delays and cost overrun, which adds to challenges in offshore wind. In onshore, the LNG project in Mozambique was suspended and has not restarted yet. In the first 9 month, direct cost to 19 -- COVID-19 not allocated to project are around EUR 60 million. For the full year, we confirm expectation of EUR 100 million for this item. In this scenario, we also saw some positive developments. In fact, our commercial activity brought good awards in the 9 months, mostly concentrated in the first half. Order intake was EUR 4.9 billion, which led to a book-to-bill ratio at around 1x. Total backlog as a result was EUR 24.5 billion in September -- EUR 20 billion in September. Despite weak operational performance, cash flow remained under control. In fact, despite a cash out of around EUR 100 million related to the settlement of a litigation in Q3 for one project completed some years ago, net debt closed at around EUR 1.7 billion, trending in line with our comments made during the last first half call. The amount of the settlement has already been fully provisioned at the end of June 2021. For the full year and factoring this settlement, we expect a net debt level stable versus Q3 at around EUR 1.7 billion. Moving to the group financial for the first -- for the 9 months. Decrease in revenue mainly came from the 2 E&C divisions, which were also the main contributor to adjusted EBITDA decrease. In 9-month, you see E&C Offshore EBITDA decreased by over EUR 600 million versus last year to minus EUR 378 million, with the largest component of decrease being the offshore wind project in the North Sea, which during Q3 incurred in some additional issues, causing higher estimated costs. In relation to our offshore wind activities, during Q3, we had to further reassess our expected cost due to technical issue during offshore operation, bottlenecks in fabrication from the yard in Far East, delays on vessel operation of Saipem 3000 suspended for full year due to the pandemic outbreak onboard and also some pricing pressure from vendors on specific offshore services. Let me remind you that revenues related to these activities are estimated to no longer produce margins going forward for the rest -- for the residual life of the project. Other Offshore E&C projects in traditional oil and gas are progressing well and are expected to contribute in the Q3 with a positive EBITDA of around EUR 70 million. The E&C Offshore EBITDA decrease year-on-year was also caused by the present in 9-month 2020 results of project in completion and releasing positive contribution upon finalization, which were not substituted by similar volumes in the last 12 months. For the E&C Onshore, the year-on-year adjusted EBITDA decreased by EUR 160 million, down to minus EUR 42 million. In line with our comments on the first half, Mozambique project contribution was lower than initially planned, since also in the Q3, the bulk of revenue of the project mainly came from suspension and security costs on a reimbursable basis. The second element is the absence this year of the high-margin project in completion during 9-month 2020 and not substituted by new ones. Third element is related to delays in project in Middle East due to restrictions related to COVID-19. Lastly, we had items related to a legal case with a supplier on an ongoing project and bad debt provision, which were fully booked in the first half. Looking at below EBITDA, D&A decreased year-on-year by EUR 74 million due to the termination of contract on a leased E&C vessel -- sorry, I'm [ joking ] with the slide. Is it the right one? Sorry. I believe it doesn't work, the evolution of the slide. Anyway. If they see the one over there -- anyway, let's hope the slide that you can see is the right one. D&A decreased year-on-year by EUR 74 million due to the termination of contract on a leased E&C vessels last year and to 2020 impairments of Offshore Drilling assets. Lower financial expenses by EUR 45 million are due to the costs incurred last year in half 1 for the bond buyback of around EUR 20 million and to the lower expenses this year for the foreign exchange derivatives and leasing, partially offset by the cost of new notes issued this spring. For the full year, we confirm our expectation of a lower figure than 2020, with Q4 in line with Q3. Results from equity investments were negative by EUR 10 million, improving from half 1, supported by project progress. We expect this line to remain positive in Q4 following the execution of this project. Taxes for the period were EUR 90 million, consisting of corporate tax income and withholding applied to gross revenue in specific countries. The year-on-year decrease is due to lower taxable income. We confirm our expectation of a full year taxes of around EUR 120 million. Let's take now a look at the special item in the next slide. Moving on to the special items. Special items in the 9 months were EUR 259 million, of which EUR 161 million at EBITDA level and EUR 95 million at D&A level. This special item came from direct cash costs related to COVID-19 of EUR 61 million and others of EUR 85 million, which are the combination of provision for redundancies for EUR 23 million and for the litigation of a project already completed for the remainder, EUR 62 million. We booked EUR 113 (sic) [ EUR 113 million ] of write-downs, of which EUR 18 million of inventories, which impacted the EBITDA; and EUR 95 million related to assets, which impacted on the EBIT level, mainly related to the E&C Offshore vessels and yards planned to be scrapped and closed in the next years as the consequence of the implementation of the first actions of our competitive program. You will have in your pack details by division, but in the interest of time, I prefer to move straight to the cash flow analysis. The cash flow evolution is highlighted in the light blue shaded area. Net cash flow from operations was negative by EUR 180 million due to weak operational performance, some cash special item related to COVID-19 and some working capital absorption in Q3, driven by the progress of the project and the cash settlement of the litigation. CapEx were EUR 195 million in the 9 months and were mostly related to vessel maintenance ahead of upcoming project activities. All these elements lead to a net debt of around EUR 1.7 billion at the end of September, in line with our indication of an increase versus Q2. For year-end, factoring the cash settlement of litigation in Q3, which brought a step up, we expect net debt to stay in the region of EUR 1.7 billion. Moving on to outlook for 2021. I have already shared some of these elements earlier. For the second half 2021, we expect revenue at around EUR 4.5 billion. Fleet class renewals and project progress should lead to CapEx at around EUR 250 million. We confirm our outlook of a positive adjusted EBITDA in the second half. Finally, on net debt, as said earlier, we are now projecting the year-end at around EUR 1.7 billion. Thank you for the attention. Francesco, the floor is yours to present our strategy.

Thank you very much, Antonio. I want just to make sure that people in the audience can see my slides, which I think is always important. Good morning, and welcome to this day. It's an important day for us. You may remember that when we announced first half results, I said a few weeks into my new position as CEO that I was convinced that Saipem has all the elements and the requirements to compete successfully in the future. After 3 months of work since that date, I can only confirm, I'm even more convinced than I was at that time that Saipem has an enormous potential -- value creation potential that we can build on. But today, I must also tell you that contracts, projects, risk needs to be managed in a simpler, more effective, cohesive way and a tight alignment and a tight, I would say, alignment -- in a tight alignment to just one set of clear objectives. This has not always been done in the past. And a new model is needed to drive the company and lead it to where it needs to be, which is a profitable, resilient player in the energy transition. Today, this is an opportunity to share my vision for the new Saipem and actually the changes that we're embarking upon to deliver this strategy. So the strategy at the core is a simple one. We want to build a growing profitable cash-generating Saipem that captures, in the short term, the profitable growth opportunities coming from the investment cycle that we're all seeing -- we're already seeing in our books, by the way, as you've seen in our results, in the core business, but also is capable of acting as a profitable enabler of the energy transition for our customers, for a wider range of customers as we would see. The key priority for us as a strategic priority is reducing costs and derisking our portfolio. And it's not just the exercise that what we need lower cost, no, we need to fundamentally lower the breakeven. Because with a lower breakeven, we'll have an opportunity to be more resilient and derisking our activity in general. So that's a fundamental priority of this strategy. We also obviously need to foster the green supply chain. We were contracting the energy sector. People will look at us to guarantee that what's behind us is sustainable, is compliant with the strict ESG targets that we have and we've shared since a while. And that will enable us to partner with our clients in their journey to net zero in a context of a very rapidly accelerating technology innovation. Now innovation and technology is not new for Saipem. People, particularly in this audience who have followed the company for a while, know very well that Saipem is not new to technology innovation. We've been often the guys who made the difference in a project. And talking to the people within the company, you feel the sense of proud and pride about having the Blue Stream pipeline, the ultra deepwater projects, the largest gasification plant in Jazan, the robotics in subsea. And even today, the energy transition is not new to the initiatives that Saipem has already taken in this space. I'm not going to go through each one of them, but these things relate to experimenting and piloting in hydrogen, in carbon capture. We have been working with largest and smaller clients in, for instance, designing recycling plants for plastics. There is already a good level of activity in that sector. But today, it's not -- I'm not saying today in terms of capital day, in general terms at the moment, it's not just an issue of technology innovation. The way we see the energy transition is a much more radical change in the energy ecosystem as a whole. We're moving from a world of carbon-intensive, centralized, big plants, hardly digitized, hardware-based, where in order to win, you needed vessels, international logistics, engineering, construction capability and was fundamentally done of tailored one-off plants. That's not disappearing overnight. But on top of that, there is a fundamental shift to a new world of lower carbon, but that's fine. We all know that's going for carbon to low carbon. But what I think is important to emphasize from our perspective is that we've seen and understood that we're going from centralized to distributed ecosystem, much lighter, digitized, full flexible, service-orientated, where the capability to compete is much more rooted into intellectual property, talents, the software capability, the ability and technology to monitor the technology evolution, understand what's winning and what's losing and scaling it up and engineer it in a consistent, robust, reliable way. And it's not just tailored one-off, but it's often the case of repeating standard modular plants. And that is driving an interesting change of variety, some level of dynamism in the sector. Even starting on our larger accounts, the traditional energy companies, we're seeing a wider range of demands coming to us. There are companies that are focusing on their core and decarbonizing those processes. And there are companies that are setting the pace in changing. They're now investing themselves in new companies. And they're talking to us, how do we decarbonize what we've got and how can we engineer the new. And therefore, we are kind of facing a wider spectrum of requests coming our way. And even I think more importantly, there is a new profile emerging of what we were used to call the energy indices now become an energy ecosystem. We all read about the emerging technology or new energy carriers. But actually, when you look into that, there are still a lot of challenges in engineering and capability of how you translate a specific idea or a technology pilot into something that can pump energy out on a daily basis with the level of resilience that we're used to, to build. And therefore, we're now talking interestingly for small companies to say, how can we scale it up; to larger companies, how can we make it reliable. But also in the client base, this company and I think many of players in this industry, we used to talk just one set of [ constitutes ], which was the big energy companies. But now there is a disintermediation going on. The pressure to go to low-carbon footprint activities is having -- steelmaker [ hard to abate ], cement factories coming and talking to us, trying to understand what kind of technology they need to adopt to go and implement and make it happen that strategy of low carbon. So we have a new set of customers appearing, often with demand that technologically driven, but smaller -- repeatable smaller plant. And I don't have to tell you because you're in the business of observing what this space is doing. There is a very strong demand from large plants and infrastructure owners to develop better maintenance and monitoring systems. They want to decrease the cost of ownership. They want to decrease their carbon footprint. And predictive maintenance, artificial intelligence, data-driven systems are in great demand these days. And we have to take care of that specific set of demand. And lastly, but obviously not last really, this new ecosystem is bringing into the equation a new look at the sustainable infrastructure, how can governments and communities get to where we need to be. And we will hear shortly from COP26 without taking into consideration a new way of managing, developing infrastructure that is not just concrete and iron, but much more interconnection, systems integration, which is actually not that different from what Saipem has been doing in another field but the engineering and standardization of complex, reliable systems. And that's why we need to adopt what we define as a dual strategy. It's kind of being the technical co-designer of the energy transition journey for big plants. And there is, believe me, a huge need for that. But at the same time, get ready to deliver modular, scalable solutions and digitally enabled service to a much wider range of customers and think of the consortium develop as municipalities [ hard to abate ]. Obviously, in doing that, inevitably, we will have to become what we actually already are somehow, an integrator of sustainable infrastructural systems. That is at the core of how we want to look at our business going forward, organizing it and shaping it around 4 fundamental pillars that reflect each specific characteristics, specific strategic challenges, more importantly, operating priorities, how to make it happen. And therefore, the first one is what we call, in this document in this time in this presentation, the asset based offer. Drilling, vessels, fabrication yards, that's the place where you need to optimize the yield of those assets, the utilization of those assets that need to be managed in a new present, but come from the core expertise of Saipem. Then you have what we define as energy carriers, which I'm sure you have a sense of fairly wide range of domains, but where we want to be the powerhouse for large complex projects along the lines I was referring to just a minutes ago. And then the third one, which is a new way of organizing a kernel of what we already have, which is the offer for the new future. It's robotics, it's digital services, and importantly, industrialized repeatable solutions for the new world. And then infrastructures. I know we have been and we are operating as infrastructure player in the high-speed rail system in Italy. Well, we look at that as a platform to go forward and, over time, build that as a growth engine for that kind of sustainable infrastructures that we referred. Now let me be very clear, we're not going to be changing the organization tonight. It's one, it's the beginning of a change. We will continue to be reporting our numbers along the lines that you're familiar with. But starting next year, we will obviously come back with opportunities to explain how the business is going to be evolved. Broadly speaking, drilling is in -- all of drilling is in 1. Most of what we today call E&C Onshore is in 2. And the offshore EPC is going to be partially in 1, partially in EPC carriers, depending on the relevance of the various activities, whether it's engineering, one-off large products or fixed facilities that they're now going to be installed or they tend to be more kind of conventional and capabilities in pipes or subsea. The robotics, for instance, will capture the activity that we have today in [indiscernible]. But that's the view of how we're going to be thinking the business of Saipem, getting it ready for the future while capturing today the short-term profitable opportunities that are coming from the revival of a new investment cycle that we're very encouraged by. And across the board, it's not that -- the left is old and the right is new. Innovation is something that's going to be cutting across. Energy transition technology will be part of all areas of our business. So let me just quickly go through some of the elements that will drive the operations and the generation of cash in each of these areas. Starting from the asset based, we are in a very good position. We have historical very close relationship with key accounts in geographies that are clearly moving into investment mode. And that has helped us already, translating the new investment cycle in numbers. And we'll continue to drive growth and cash generation in the short term throughout the plan. This will be optimizing -- this will also be based on optimizing, on one hand, the leased versus owned assets. You know that we already have list drilling ships in our fleet. That is something that I would like to thank our colleagues about because it's their capability, understanding and technology and know-how that has allowed us to take new vessels and shape them the way we want without buying them, but operating with limited -- in fact, with very limited CapEx. But also in order to maximize the yield, we've decided to gradually exit the fabrication model that Saipem has been working with for a while and strengthening -- while strengthening our offerings through partnership. We've announced today -- very pleased to announce the agreement with TechnipFMC in areas of subsea. And obviously, the notion of reducing -- the priority of reducing the fleet carbon footprint is part of the plan. And we've allocated, if I remember correctly, something between around 3% of CapEx in the years to come to that end. Some numbers to give you a bit of more concrete sense of what that means. It means that in '22 to '25, more than 90% in this area are generated in 3 top geographies. It's a notion of focus. It's a notion of leveraging position we already have. We expect -- we plan to scrap 9 -- 5 vessels out of the normal asset rotation exercise. And if we need capacity, we will lease it. We have a detailed plan for closing 3 fabrication yards. So all of that together means that if you take add-on cost of drilling and vessels, we see that add-on costs decrease 85% '25 over '20 for drilling and about 50% from other vessels that are linked or associated with other offshore activities. So that's a very important block in our plan. We drive cash. We drive growth. We drive profits out of that. On energy carriers, which I remember -- I remind you, is the large projects, we have and we face a very sizable opportunities. I think it might be useful to remind us all that Saipem has built more than 300 big plants in refining, pet chem and fertilizers around the world. That's an important installed base that needs refurbishing, needs hybridization. Obviously, the various owners will pick alternative choices. Some of them will be reconditioning those plants, and we're doing some of that work. Some other will go for new plants. And -- but it's important to understand that we have visibility of what we've done in -- around the world, and that's an important base. But also looking forward, thanks to the effort that the company was -- has successfully made in LNG and gasification (sic) [ regasification ], we now see over the course of, say, of the next years, a commercial opportunity to target a total addressable market of about EUR 100 billion. And we already have more than 50 in discussions, initiatives on different stage of maturity to address that market. But I think it's important to emphasize one element here that the focus for us is going to be on disciplined execution of backlog. But with the same discipline, the discipline of cost and risk, we want and we need to apply to order acquisition and new project acquisitions. We're not in the business of chasing projects to cover our fixed cost. We're in the business of lowering our fixed cost and be selective on the projects we go and compete for because we know that in those projects that we've got something to say, some value to deliver, which means a shift in the focus and an acceleration of a paradigm that I've already seen, but needs to be strengthened. We need to do a better job in proactive marketing in understanding the segmentation of the customers out there and how can we push forward our idea and push the value proposition. And to do that, we need to accelerate the innovation through a range of initiatives around building and leveraging our own patents, some venture capital initiatives to understand [indiscernible] and scale initiatives. And obviously, in acceleration of digitalization of not just our processes, but also the way we conceive plans. You've seen recently an announcement of an agreement with Honeywell to develop 3D models, 3D digital twins of our urea plants. It's an interesting example. We have our patents. We can have differentiation in the way we offer and build the plants. We're now digitizing that process because we see that as a platform of extending the relationship with clients of creating the platform that enable us to have a bit more recurring revenues going forward as we not only just deliver the plant, but we, together with the clients, find ways of helping and delivering maintenance, the running or the monitoring of the plant. It's an important shift, something that we have the capability of doing, and that we'd be seeing our activity focus. And again, I just want to maybe mention that later, but you're seeing, for instance, we refer to the CO2 solution. We're not spending millions to do that. It's the ability to identify the patents we need and go chase them, buy them. And we bought about 90 patents, if I remember, for less than EUR 1 million. And all of a sudden, we have something to say because we put that specific knowledge in the context of Saipem scale and Saipem engineering capabilities. This is the bit where we see the opportunity to develop the offer for the new world. Let me check how long it's taking. I think it's fine. Hopefully, you're patient enough to go through that. But it's important for us to explain in as concrete possible what we -- what I want to do here. Let me start here from emphasizing the notion of the new kind of demand. If I go across the board of the projects I'm seeing my colleagues are dealing with from floating wind pilot and experimenting to solar power, to green hydrogen plant packages to small-scale CCS, they all come with the same profile. They tend to be relatively small, small relative to the plants we used to deliver of something between the $30,000, $50,000 to the few hundred million. But equally, more importantly, they tend to be modular. It's how many of those pieces put together develop -- determine the size and the power and the kind of mission of a given plant. And we need to address that market. We're addressing it already. But we can't address it with the cost structure, the capabilities and the processes that we have to deliver more, large, complex LNG plants, for instance. So the idea here is to devote a bunch -- a group of engineers to think about how can we industrialize, modularize, if you wish, modules of technologies we already have and think of a new value chain to deliver them reliably for the customers and for us, lowering the level of risk and making sure that once we develop a solution, it can be repeated and scaled. At the same time, having the opportunity of looking at what we've got already in-house, think robotics, think undersea robotics, people look at that thing and say, this is a robot. I look at that thing, I say, that's a meter. I want that thing to go around the water and generate recurring revenues for maintenance monitoring services. And we are already doing that. It's an issue of getting it, scaling it up and pushing it on a market exercise that will bring revenues and margins our way. Potentially, and that's part of the strategy, starting to create a recurring revenue model, which stabilize our business and margins going forward and help us build a more resilient Saipem going forward. We're not starting from scratch here. If I look around, there are more -- for instance, more than 70 capture -- CO2 capture -- removal plants designed and built worldwide. And again, I think I want to just go back to what I was saying before, the CO2 solution is about a few hundred thousand that allow us to be competitive on a EUR 70 million project. That's kind of the numbers compute in that way. We have 150 engineers that have been already engaged in some of the projects I showed you before. We have already EUR 200 million plus of service revenues. Now I want to be very honest. In there, there is a very wide range of things, but it's there. And I was referring to subsea. It's impressive to see what Saipem does in terms of ROV and now with this Hydrone where we already have signed contracts, and where I, more importantly, have seen the ability to manage the data architecture and the artificial intelligence platform to drive. And once you have that, you can apply to different level of services and different level of terminals and sensors. The important thing is the value and the scalability is in the platform. And in fact, if I look forward to one -- how one would conceive an offshore floating wind in this model, I see that much more suitable and much more valuable than the way we've been approaching wind thus far, frankly. You would have -- the Naval Energies acquisition, you've seen it, I think it goes back in July. Once again, not a big number, but a lot of competencies that enable us to think of our own patented base for floating wind. You would have a much more tactical mix between make or buy in terms of manufacturing and installations. Once you have the reference design, it then is a matter of convenience. It's a matter of practical economics and risk management if you want to make it or you'd just let anybody or somebody do it in some [ funny ] places. But then once you build that, you also have the opportunity to discharge your ability of monitoring through digital solutions because obviously, you -- I wouldn't expect to have the Hydrones of today managing an installed base, which is different in nature. But I'm planning to build that kind of service and the same artificial intelligence and digital platform architecture that we've developed, and we will continue to develop. So that, I think, is an important proof that -- we're seeing in terms of a new model for the kind of new demand that we need to serve. On sustainable infrastructure, I've already mentioned to you what the vision is here. I think it's important to mention that we, as in Italy and in most European countries, face an opportunity. We have the recovery funds that Europe is developing. That will give us a solid platform to accelerate and push our development in that area. The focus would not be, as I was saying, just on iron and concrete, but on digitized infrastructure that I like to define as kind of smart, safe, sustainable, secure that will give us an opportunity to differentiate and where we could build on a wide range of capabilities. Because building infrastructure today means going to the clients and say, we can do it in a safe way with our attention to health and safety, which remains the underlying pinning of whatever we do. This is something I'm not saying we can sell, but it's clearly something that we will have to play as a differentiating element in our strategy. As well as many other things we're doing already in terms of system integration. And with the relevance of the carbon footprint implications of all this stuff, we come to the fore and say, we know how to manage carbon footprint and we know how to apply carbon footprint management to the infrastructures going forward. In the plan, we have something slightly more than EUR 25 billion of addressable between transportation infrastructure, primarily high-speed rail and energy transition. And we expect an order intake of about EUR 3 billion in the period of the plan. And we're already having discussion with potential partners to operate in that space. So if I step back and look at the overall picture, I see growth in asset-based businesses, both in terms of revenue and in terms of margins and cash flow generation. In energy carriers, I would like to emphasize the shift of value over volume and the derisking of what we do. We see there more stable revenues, but with the remix of -- with an improvement of margins. In robotics, it's -- and digital and standardized solution is clearly all about growth and resilience, it's developing modular solutions, it's built on the pace of high-end recurring service revenues that we have. And we see growth there and quality revenues, particularly toward the end of the plan, but starting already towards mid of this plan. And the growth in sustainable infrastructure is starting from the Italian PNRR, the recovery fund, and go about it with the mindset that I was sharing with you, the integrated system and the platform to, over time, create a bit of diversification and growth driver. So we're going as a result of delivering the strategy towards a more resilient portfolio with a higher value revenue mix. That's the focus. How do we move from that strategy into execution? We're starting -- we're embarking upon a change -- we started already. That there are 5 levers here on this slide. But we started already on competitive cost structure in terms of reduction of costs. We've identified -- Antonio would be more specific about it. We said we had identified about EUR 100 million when we last came to the market. We're now saying that the potential for that, the target for that is get to EUR 300 million. And we're already talking very, very concrete, if I remember correctly, it's about 274 initiatives with a name, with an objective, with a timetable. The cost structure -- the competitive cost structure, and I repeat, it is not an accounting exercise. It's a strategic enabler for a resilient Saipem, because it would lower the anxiety in getting volume through the door for the sake of covering our fixed costs. We have, obviously, to keep an active business portfolio strategy. There might be business that are going out, business that are coming in. I'm sure there might be some questions, and I already give you the answer. You comment on these things when you do them. But it's important for me to tell you that we're aware that there might be opportunities in full compliance with strict shareholder value creation criteria that we have to adjust the portfolio in such a transition. And when it comes to the operating model, I was telling you before, we need more cohesive, simple, less bureaucratic organization with a more clear central set of direction that -- and a tighter alignment between everything we do with a more strategic direction in terms of commercial, risk assessment, marketing and value proposition. I've done it before in other circumstances. I know very well that it's not a walk in the park. But we have decided to start that change, and I have intention to kind of put the new organization in place at the beginning of next year. And obviously, we will inform the market of our progress. But that's a very important element of the change we bring about to ensure that the strategy is delivered. And it's all about people. It's all about diversity, inclusion, dialogue, openness, constructive debate, maybe a robust debate. That debate happens at the right time with the right energy and the right level of engagement always aimed at finding constructive solution in the interest of all stakeholders of the company. And ESG leadership is not, in the case of Saipem, just a few words on the slide. This is one of the things that, I've observed in this company, a very strong culture of compliance and interest and kind of heartfelt need to drive the company in that fundamental direction. And I don't want to elaborate too much on that. But if you think about the level of engagement of local communities -- with local communities that we have around the world, there is something to be learned and actually something that we can leverage once again in the infrastructure game. Inclusion of community is becoming increasingly an important element of the business proposition. So this is my strategy on one page. It's 4 business pillars that will drive towards the growing, profitable, cash-generating Saipem that I want to realize and build. There obviously will be an orchestration of it all, and that will appear when we talk about organization. But today is about strategy. Today is about giving the market, giving investors, giving you the sense of how we think about the future, how we act about the future and what we've already begun doing to create something valuable. And the context of a new investment cycle in the core business and the prospect of a massive investment coming to the industry for the energy transitions create a framework, a context within which we're confident that this thing with challenges can be delivered in the next few years, starting from 2022. With that, I will leave the floor to Antonio for giving you some more kind of granular implication of what we've presented here in terms of numbers for the next 5 years. Antonio?

Thank you, Francesco. Now let me check. Okay. This slide, the strategy we have just presented is going to drive our company from a challenging present to a resilient future. The main drivers will be revenue growth and cost reduction, allowing us to recoup pre-pandemic profitability levels over the plan horizon. Revenues would be driven by a recovery of drilling, both offshore and onshore, which we'll leverage on the existing backlog and the significant growth we expect coming from the future contracts, we are already discussing with clients. We expect drilling to reach [ EUR 1.1 billion ] revenues in the last year of the plan. As far as the E&C Offshore is concerned, revenue growth is expected to be driven by the important backlog of future awards, for which we foresee significant opportunities in Western Africa even from next year. In relation to Onshore activity, revenues will also depend from the restart of the Mozambique project, which we expect to restart at some point in the first half next year. Our new strategic frame is now reflected in the reporting we comment, which today is well structured by division. We will change reporting next year. We intend to capture growth allocating significant CapEx both for technology and our traditional core business to enable our new strategy. We will keep a strict focus on how we allocate our capital, aiming at strengthening our balance sheet while supporting our business developments. Significant and sustainable cash generation is expected in the plan period beyond 2022. Our backlog provides strong revenue coverage already from next year. We do have almost EUR 9 billion of backlog to be executed, a very good starting point. In 2022, we consider a restart in Mozambique, as already said, resulting in a step up of revenue versus 2021 for the E&C Onshore. Revenues are later expected to normalize after 2022. For E&C Offshore, we want to remind that EUR 3.6 billion backlog to be executed in 2022 excludes around -- includes around EUR 600 million of contribution from wind farms. Beyond 2023, we expect further recovery of our Offshore segment, which along with drilling will support the revenues growth. Moving on to the next slide, we can see how our sizable backlog can be further complemented by commercial pipeline of EUR 23 billion of selected opportunities across our E&C businesses. The overall pipeline size has improved compared to EUR 21 billion we presented in the first half. This map shows many opportunities in the key areas we are focusing but doesn't show the full picture. In fact, timing matters. As we speak, we see activity regarding momentum after a muted Q3, which we expect to turn soon in awards. Timing of awards is always up to clients, but we see an acceleration ahead of us, in particular, in Western Africa offshore. In the medium term, we expect more business from modular services and new activities, which could represent around 20% of our top line in 2025. Bottom line, we expect an average annual growth from 20, 21 days to 25 or 15%. Moving on to cost reduction. From our competitiveness program, we had identified specific actions to reduce our operating leverage. The 3 cluster of action are: assets, operating models and G&A. On assets, we plan to scrap 5 vessels, AC vessel, over the plan horizon, and 3 of these will be scrapped in 2022. We do also plan to close 3 yards, of which 2 are expected to close operation next year. As we are reviewing our -- how we operate, we plan to focus our engineering in fewer places and to reorganize our engineering hubs. Finally, G&A will be reduced, also thanks to actions such as nonstrategic international office closure, streamlining and process simplification. Net of implementation cost, the program is expected to bring savings of EUR 100 million next year, leading to a run rate of around EUR 300 million by 2025. Moving now to the cash flow evolution in one of its key components, CapEx. We do expect invest -- we do expect to invest, from 2022 to 2025, around EUR 1.5 billion cumulative, which means an average of an investment close to EUR 400 million. We consider this amount fit to fund our strategy in relation to our traditional core activity. Starting from the strategic plan, we also consider over EUR 200 million cumulative CapEx to position Saipem as a technology owner [indiscernible] consistent with our strategy, focused on R&D to develop and acquire new cutting-edge technologies that will be integrated and scaled up in our processes and offerings. As far as net debt is concerned, in 2022, we expect operating cash flow to be neutralized by the working capital expansion as project progress. With the absorption associated with the reversal of significant advanced payment received up to now and by the cash out related to the extra cost provision on wind farm project. This should result in a net debt increase up to EUR 2.2 billion next year, considering CapEx of EUR 400 million and increase in lease liabilities of EUR 100 million. We consider 2022 the year of inflection since from 2023, we expect to significantly leverage, thanks to a sound cash flow generation. Starting from our current expectation on net debt at the end of 2021 of around EUR 1.7 billion, over the next 4 years, we project more than EUR 800 million of cumulative free cash flow generation, which should support the diverging towards a net debt position below EUR 1 billion in 2025. Moving to our debt structure. Let's see the maturity profile ahead of us. The profile is well balanced over the plan horizon, with the first maturity in 2022 of around EUR 700 million, the largest part of which is represented by the EUR 500 million bonds expiring next spring, which, as you know, which has been already prefunded with the bond issue we made in March. The remainder is covered by system liquidity. End of September 2021, our total liquidity was around EUR 2 billion, including funds available in the consolidated perimeter and cash in joint ventures. In addition, we have the fully undrawn committed revolving credit facilities of EUR 1 billion. Our attitude is to proactively manage our balance sheet. And for this purpose, we are monitoring that capital market. Going forward, we will leverage on the new strategy, which position us further as a key player in the energy transition to explore in addition to the traditional debt capital market and bank facilities. New and more efficient sources such as sustainability-linked financial instruments. In relation to the financial covenant on our banking facilities, we started the process to reach new agreements with the lenders just last July. Some of the lenders have already formalized their waiver. We plan to present the new strategic plan to the rest of the lender just after today's presentation. We are confident that our new financial plan strategy will be duly considered by our lenders, allowing us to reach an outcome by the end. All the targets I've just mentioned are reported in my final slide. Revenues on our growth of around 15%, ambitious efficiency plan with EUR 100 million cost reduction expected next year and EUR 300 million annual run rate from 2025. Revenues growth, disciplined execution of backlog, entire risk management along with the cost efficiency should support our EBITDA improvement. We target to be nearing to the prepandemic situation adjusted EBITDA levels from 2023. In this respect, we see a 2022 adjusted EBITDA on the trajectory towards our 2023 target with levels depending on challenges related to the evolution of our current portfolio. In the medium term, we expect to be back to a double-digit profitability by 2024. On net debt, we expect to go below EUR 1 billion in 2025. Francesco, the floor is yours for the final remarks.

Thank you very much, Antonio. So we will come to the conclusion of this part of the presentation. And before we get into the Q&A session, just let me summarize what the key message here. The growing profitable cash-generating Saipem that we want to build is based on a view -- on a positive view of the industry, we're facing. 2 short one -- short term and 1 longer-term growth cycle. We're already seeing as we look in our drilling rigs and drilling ships, the impact of this cycle coming our way. You've seen the quarter-on-quarter revenue increase on the EPC offshore. That's all signs of investments getting restarted, and we're there to capture that growth. But we also see a fundamental shift that the energy transition will translate into CapEx in the industry of new plants, new technologies is technology, which is going to be solving the energy transition equation, and we know that technology space, and we want to capture that. The new operating model will allow us to put the strength of Saipem: the customer relationship, our technology capabilities, the assets we have, the engineering skills, to drive them to deliver EBITDA growth, strong cash flow generation and the deleveraging that we all know is needed to unlock the value of this platform. But the platform is there, the ideas are there, the will to compete is there, and I'm very confident that we will be together delivering this strategy. With that, I will close the presentation here, and will leave the floor to you for your questions. Thank you very much.

[Operator Instructions] The first question is from Alessandro Pozzi with Mediobanca.

But first of all, let me say that I think it's refreshing to see Saipem taking decisive action and I'm sure investors will eventually appreciate the efforts to study the Board and prepare the company for the new pattern in change in energy. With this in mind, I think the first question that comes to mind is about the rationalization and the exit of the integrated fabrication model, the closing of the yards, the scrubbing on the vessels, you will give up some capacity to service your existing time base in the oil and gas, and especially now that potentially the CapEx could go up in 2022. So I was wondering if you can give us a sense of how your potential revenue generation capacity in the traditional oil and gas business will be impacted by this new rationalization plan? And as a follow-on from this, your, I think, 15% revenue growth target every year to 2025, it seems very ambitious, and I was wondering if you can maybe point us to what specific division you think is going to support revenue growth, whether you see subsea also contributing to this growth as well?

Thank you very much. Let me start from your last part of the question. The growth shape in the plan moves starting from the asset-based business. The bulk of the growth in the first part of the plan is coming from drilling and the offshore activities that we can see coming our way. Obviously, as you move towards the end of the plan, there is also a more material contribution of growth coming from the new services and the new modules. But obviously, getting back to the first part of your question, the capacity we have in place and these restructuring or, if you wish, the cost reduction initiatives that we have are thoroughly aligned with the projections we see in terms of revenues and services. We might -- this is so -- we're seeing funny places in the slide where we see the rig conversion of a question, apologies. So let's go back to your question. It's -- I referred to the complement to capacity in terms of idleness of our assets in one of my slides, you might want to get back to that. It's about, if I remember correctly, 85% reduction in idleness in drilling and 50% reduction in idleness in other vessels. So -- and when it comes to yards, we're not saying it's going to be causing it is at the cliff because we'll be completing the projects that we're doing in the various yards. But the scenario is very different from when Saipem decided to open its own yards. We have capacity in the world. And as the attention of the company gradually shifts to more value-added capacity -- capability services products, there might be a better way of using our capital than keeping it tied to yards whilst, in fact, we can rely on some more specialized players that could help us in that respect. CapEx, growth, capital, capacity, they're all linked. I was referring to the fact that, if I remember correctly, 4 of our 12 drilling ships are already leased. That's -- if you look at the Santorini, which is a last generation ship, we are not buying it. We're leasing it. We pulled a few millions of CapEx in kind of refurbishing it and getting it ready to make sure that it works along our standards, the quality is not a compromise. Safety is not a compromise. We know exactly what we -- not personally, I have very, very good people in drilling in the company. They know what they're doing. They know how to shape the value-added layer of that ship, and that's an effective way of generating cash with a new way of deploying CapEx. So I hope that helps.

And can you give us a kind of a nudge on which complication yards and which rest also like to be scrubbed.

We would love to do that. I don't think it would be particularly, commercially, helpful at this stage, but we will inform you as we do it. They're not in Italy.

Okay. And just a final one for me, if I can. So as you move into new markets and segments, as we've seen in the offshore wind, I mean, sometimes it could be sticky. And I was -- I think in Q3, as far as I understood, there's been some additional extra cost on the offshore wind projects in the U.K. And can you tell us what are the lesson learnt that prevents from having other projects going sour as the one we've seen in the U.K. outside the traditional oil and gas business?

Thank you very much for your questions. There are many lessons learned. It's kind of difficult to summarize. Let me try. First of all, better understand the customers you're fronting with. These are not oil companies. These are not companies that have a genuine burning interest to getting to the project working. You know better than I do. There are consortium that lenders that kind of -- I'm not saying private equity guys, we're kind of nearing that. They have an IRR in mind. They don't have a flow of energy carriers to deliver. So first one is taking good, good measure of what you had in front. The second one is, what I was referring to before. What is the cost base, the value chain, the business system you have in place to serve these projects. These are not kind of projects that you could serve as if you were developing subsea exploration well at 2,000 meters under the ocean. These are pools, turbines to be disciplining, put one after the other. And it's not because we know how to pull an installation that we necessarily know. What are the kind of soils tracked of a certain location. So we kind of -- we learned our lesson. The reference I was making in projecting going forward, a possible participation scheme in the floating offshore is something that we feel more comfortable with. Technologies, make or buy installations, view to have a kind of an extended life cycle type of contracts in terms of maintenance and managing. So yes, yes, there are lessons to be learned. There are risks to be managed.

The next question is from James Thompson with JPMorgan.

Several questions, I guess, in the interest of time and to give other people time as well, just 3 then. First of all, could you talk a little bit about the depth of the agreement you also announced with TechnipFMC. I mean I think we've been wanting to see material kind of consolidation in the subsea arena for some time. So perhaps you could just talk about how expensive that is. That's the first question.

Sure. We're very pleased about this agreement. I have observed a very close culture profile between the 2 companies. But let me be very clear, this is a commercial agreement. And one way of thinking about is an opportunity. Obviously, in full compliance, with the market rules of the game, an opportunity to look at some selected projects together and deliver better value to our customers. So there is no, kind of, I cannot put it, equity strategic taken -- for now, it's a commercial government, we want to see it working. We know I've learned and I've observed all the agreements that have not been particularly fruitful. I have confidence that this one can be delivering good results for both companies. But as again, I repeat it, we're very happy. We're very pleased that strengthen our capabilities, strengthen our commercial strength, value proposition, but it is just that, a commercial agreement.

Okay. Second question is, can you just give us a bit more help to kind of bridge to the EUR 2.2 billion net debt number by the end of 2022? I mean I think that's clearly raised a few eyebrows this morning. I mean I was expecting kind of CapEx to be quite high in 2022 in part of this plan, but it looks pretty much flat through the plan. So maybe you could give us some more detail on kind of the costs, do you expect to complete the reorganization? And what does this imply for kind of margins in the businesses next year?

Sure. Before leaving the floor to Antonio for a more detail thing, I think the key drivers, Antonio was mentioning before, is kind of the unfolding of things from the past that have an impact on working capital is downpayments from previous projects that have been particularly peaking on 1 year. And so we'll be generating revenue with that. The cash component that at the same time, we have incurred costs that we will be paying out next year. But the 1 point I want just to make sure and I emphasize, the CapEx we have is the CapEx we need to deliver this -- the strategy. Again, I want to -- I made a couple of references before. It's not to say that we could transform the company with less than EUR 1 million investment, don't get me wrong. But there is a very high value added in our ability to scout an understanding where to invest to make our CapEx very, very efficient. But having said that, Antonio, you might want to elaborate a bit further.

Yes, for sure. In 2022, the dynamics for our working capital is, I would say, quite simple. First of all, we have to consider the significant amounts that we have received as anticipated advance payment. Today, we do have -- but as I say, at the end of this year, we will have around EUR 650 million, EUR 700 million of advanced payment, which will be gradually absorbed during the plan and a significant amount of that is in parallel with the phasing of the project, and the progress of the projects will be -- will occur in 2022. We do also have to consider the amount of cost that we have already accounted for so far for the offshore wind activities as several times discussed. That will have the disbursement -- the relative disbursement in the next 2 years. So those are the 2 important elements that we have to take into account on that. So in a nutshell, the profit -- the operating cash flow generating by our business, we will be mainly absorbed by this 2 components on the working capital, and therefore, what remains our CapEx, EUR 400 million of CapEx that lead to the bridge between the cash situation and the EUR 2.2 billion at the end of 2022. You have also to consider that we expect and in this projection, we have considered an increase of the effect of the IFRS 16 for an additional EUR 100 million. So operating cash flow absorbed by the working capital were the 2 main elements I discussed: CapEx, EUR 400 million; and additional IFRS 16 element for EUR 100 million. This is the bridge between our EUR 1.7 billion at the end of the year and EUR 2.2 billion at the end of 2022.

Last one for me. Can you -- I'll just go back to the first question on this revenue CAGR, the 15%. It's pretty lofty. Is the base 2021 that was kind of EUR 7.5 billion, EUR 7.7 billion that you expect this year? Or the 2022 figure where obviously, you've got EUR 9 billion in hand? And then put to one side the kind of what's the fate of that 15%? But more through the presentation, you talked about focusing more on value versus volume. You talked a lot about recurring revenue streams, maintenance and modifications. That, to me, seems like lower through-cycle revenue more than lumpier but for any large production revenues. So how do you sort of square those 2 together, please?

It's -- I understand the question very well. It's -- I'll go back to the same answer. I think the drilling and the offshore vessels that we have plan to work much heavily than we have in the recent past. I would point to that part of the business. The asset-driven business, it's an important component to push the company forward in this transformation. We obviously are looking for new large projects. They're not going to go away. We don't want them to go away. We want them to serve them more effectively though, and having a tighter framework. And in years to once we have built that kind of base towards the end of the plan, the growth will kick in from the recurring revenue and the modular plants that we have. But in the short term, the jump, the push, the drive is going to be coming from the restart of the investment cycle. Now the forecast we have in this year, then there is the Mozambique, the '21 to '22, which will be -- drive the first step in growth. And as we said, and we repeat, we expect that to happen around mid next year. But that's the sequency of the growth engine of the plan.

And so base of 2021, is that the base that we should consider this 15% CAGR?

Yes, I would add to the elements said by Francesco. I would add to the mix of revenues that pro forma, we can have in mind in [ 2021 ] and at the end of the plan with the different pillars of our strategy. First of all, for [ 2021 ], I will say that something more than 50% is represented by energy. More than 35% is represented by the asset base in which you have to consider drilling, I remember, 10% by the digital and robotics, where we consider also the contribution of wind and the rest is infrastructure. This is for today. For tomorrow, end of '25, 25% is energy. The reduction is compensated by the strong increase we expect on the -- what we call the digital robotics, which we expect to have a weight on the revenues at the end of the plant of around 35%. You have to consider also in this element, the contribution for the construction of the small-scale plants we expect to have. 35% are -- is related to the asset-based pillar, let me say, and the rest around 5% by the infrastructure.

The next question is from Nikolaos Konstantakis with Exane.

I have a few questions, both short term and long term, if you don't mind. Starting from long-term ones. The nature of your business means that mistakes in the past can take a while to get out. How do you think about the profitability of the backlog, execution on ongoing projects, the risk profile of business. I'm asking particularly because I'm seeing the [indiscernible] equity affiliate, which relates to Arctic now being negative or being at 0, you're carrying at the half year results, there's market concerns around some contracts in Brazil. So any color you have around that would be very helpful. I noticed also on the long term that you're no longer talking about an exit from drilling division. I get that there is a cyclical rebound. Is that still -- is that a conscious strategic decision not to exit this? Or is it just a function of the market conditions? And [indiscernible] talk about the short term, please? And of course for the third question. Can you -- I'm sorry, I didn't see any notice of the -- or any comment around the covenant situation given where the market is about [ 680 ] EBITDA for next year, EUR 2.2 billion projection of the net debt. It feels to me like you're still hovering between 3 and 3.5x. Can you just give us some color on discussion with your lenders? And how that's going? And if there's any color you can add?

Okay. Thank you very much for your questions. Let me take -- let me start from the portfolio one. I repeated, we have the portfolio management, the active portfolio management as one of our tools going forward in the plan. And as I was saying before, you talk about it when you have something to say. We're very encouraged by what we've seen in the economics of drilling, but one is, value is going to be the driver here. Value is going to be the driver. The value creation is going to be the driver. So I will leave it at that. In terms of the risk of backlog and the challenges, we're very aware of that. Obviously, what we present today and the costing is based on the best of our knowledge and understanding of what the inherent risks are. But derisking and cost reduction is the key short-term element of the plan, and we're very aware of how the mechanics of this business work. And that's why, when talking about 2022, we prefer to give you a sensible trajectory having 2023 more a kind of a clear view. We're confident about the short-term future, but equally aware of the challenges of managing that backlog. I would leave it to Antonio for the covenants.

The contribution, yes, before that, I understood the request of having some colors in terms of contribution of not of -- not consolidated project companies. I would say that the result we had at the beginning of the year was negative. But as commented, things are going better. We expect such a result increasing quarter after quarter. And I would say that in the 4 years plan, we are quite positive on that. We do have such the result. We expected the result of such 2 main projects in line with our expectation, and we expect the contribution in terms of income from not us, from associates, so below EBITDA, close EUR 100 million. This is the contribution for the entire 4 years plan. As far as the discussion with the lenders, the story is quite simple. We started immediately after our call in July. So end of July, beginning of August. We have started immediately negotiation. The conversation with our lenders in order to accomplish the situation because I just want to remember that we do not have any bridge today. We are just managing the situation as it will be assessed at the end of this year. We formalized our request and the proposal mid last month. And we already received 4 positive -- 4 answers, 4 positive answers. For the rest of the banks, we are discussing with them and in particular, some of them have requested to discuss the financials of the business plan that we would have presented to the market. So the next days will be the ones in which we will arrange all the meetings with them. We are quite positive on -- in terms of expectation. I believe that on the basis of the number we have in mind, in the plan, we are in the position to explain them the sustainability of our -- the solidity of our business plan and the sustainability on our debt. So we are positive on that.

And I'm sorry, if I may just follow up, what -- how do you guys define value in the context of, is this a free cash flow reference? Is it a return on capital employed? Just want to understand because it's been mentioned a few times and it's definitely the right mantra. Just how do you define the value of the volume in your minds, in your KPIs, in your scorecards, whatever you want to...

Thank you very much. I mean, the simplest straight mostly forward way is a robust assessment of the margins associated to any given project, taking into account the magnitude, the type of contract, the risk that you would assume. We would like to ensure that the projects that comes through the door are projects that have a robust, resilient capability of generating a margin that covers well above the fixed cost of the projects in terms of corporate debt, I think it's the most honest, direct, straight, simple question. Obviously, on a more general level, there will be different KPIs that we have in mind. And particularly when it comes to the portfolio management, I won't -- I don't need to tell you what are the KPI that we would be using, but that are the ones that you would be using to assess the validity of our moves.

The next question is from Kevin Roger with Kepler Cheuvreux.

The first one would be related to the CapEx you announced EUR 400 million, is that right, which is quite high compared to what you did over the past 5 years, you were closer to EUR 300 million. So I was wondering, if you can explain us in terms of, let's say, split, what you need to do with those EUR 400 million? Does it mean that you need to invest in new vessel in offshore wind, for example? And I was just wondering if you can give us some color on, let's say, towards the EUR 100 million CapEx per year. The second question is related to offshore wind. Sorry to come back on that, but -- so the wind project in your backlog already generated something compared to EUR 50 million loss before this quarter. This quarter, this is another peak loss. So when should we expect the loss to be over on those projects? And I think you mentioned the fact that you have EUR 600 million of backlog from offshore wind for 2022. What should we assume in terms of profitability on that? And the last one, if I may, is coming back on the 15% growth that you mentioned in the business plan. Taking into account the backlog, basically, you have close to 20% already guarantee for 2022 versus '21 and also a quite nice growth revenue for 2022 compared to 2023 compared to 2022. So about 15% growth, is it correct to assume that a large part of that will be concentrated in 2022 and 2023?

Okay. Thank you very much for your questions. Quite a long list. I will leave most of them to Antonio as far as the growth as well. No, no. Go ahead.

As far as the CapEx, I would say that the level of the CapEx, I already commented, is consistent with our strategy. It's consistent with, in particular, with the specific project we have in our pipeline because you know that part of the CapEx are related -- sometimes are related to some specific projects and for other times are related to some renewable of our asset, which are requested for this project, but can be used also for the following one. So I would say, a significant part related to the projects, a significant part related to the maintenance of our fleet. The cyclical maintenance of our fleet is one of the main elements of this bulk. And the third, but more important for the future is the, I would say, again, the more than EUR 200 million of investment, which we have allocated to the technology, to the growth we need for reaching of our portfolio of technology. The other one was still in relation to the offshore wind project. As you know, first of all, let me start from this element. The magnitude, the order of magnitude of these changes is due to the fact that -- is due to the fact that, we consider this project with the remuneration will cost equal to revenues. So the additional cost that we estimated due to the -- we have estimated this quarter due to the evolution of the situation with respect to the ones, we have assessed that at the end of June has been completely accounted, recognized in our profit and losses. So this is the reason -- technical reason for the important volatility. The additional around EUR 130 million that we have accounted to the most important project -- more important project we are talking about on the onshore wind is the result of a different situation in terms of execution, I would say, and from the -- with the effect -- from the effect of the COVID that pose our problem in terms of the execution in the original schedule. So most of the costs are due to the longer timing that we now expect, needed for completing the project. Just for giving you the example, one -- the fleet was not operation for more than 48 days due to the pandemic, let me say, we had. For each day of not using this fleet, this vessel and the spread around the fleet -- around the vessel, the cost is close to EUR 400,000. So you can now estimate the impact in having weeks of additional works for completing this project. I don't remember the other point?

[Foreign Language].

For [ 2022], we do have around EUR 650 million of revenues I remember, we consider revenues and costs aligned.

Just to complete, if I may, the question is very relevant, as you can imagine, is something that we've been very focused on. Obviously, what we have today is the best estimate for the cost to finish and complete the thing. Antonio explained some of the driver. I was going back to that. That's -- there is a fundamental structure that the company have decided to take to deliver this project that comes with a risk. Going forward, the projects would be done in a different way, but we have to complete this and we have to complete that in the frame of asset utilization and procedures that were agreed a few years ago. So we're working on that. We've put forward our best estimate to complete the work, but the project, the contract, the specifics are there to be executed. That's the best answer we could give you today.

Okay. And maybe if you can answer the question related to the 15% growth, if it's correct to assume that a large part will be concentrated in the first 2 years.

Yes. Sorry. The -- first of all, there was also a question from one of your colleagues about the CAGR starting from 2021. So yes, there is kind of -- there is a bit of a jump there. But that is leading to the 15% growth therefore kind of in the first part. You're right when you point to that direction.

The next question is from Michael Alsford with Citigroup.

Just got a couple, please. I was wondering whether you could talk a little bit about uses of cash. It feels to me that clearly, with the step to connect net debt next year, the investments that you plan, there's not much room for payments out from distribution to shareholders. So I just wondered if you could talk a bit about how the dividends fit into the broader plan over the next 4 years? And then secondly, a specific question just on the backlog, just on the onshore E&C backlog for 2022, EUR 4.5 billion. Could you just confirm how much you're assuming will be Mozambique in that number, please? And then just finally, sorry to dwell back on the revenue CAGR, 15%. There's a, I think for credibility of the plan, I think it would be helpful for the market to understand what you see as the addressable market perhaps over that period of the plan? And maybe what market share you think Saipem will generate? It's just very difficult, I think, to really give confidence to the market on the 2025 number of 15% CAGR without a bit more color as to how big the market opportunity could be for you.

Thank you very much. Let me -- sorry, just the first question was about -- sorry...

Shareholder distribution...

Sorry, apologies. Absolutely. I think it's a bit premature today to talk about it. We know that this is what we're putting forward here is fundamentally a description of growth story that hopefully will build value over time. We will get back when we're ready having had discussed with our Board these things. But today, we don't have any particular -- fewer information on that point to share with the market. On the backlog for Mozambique, Antonio?

3.6, yes. For the Mozambique, the backlog is the one that we have already confirmed, EUR 3.5 billion, EUR 3.6 billion. I would add a comment on the assumption that we can -- we had in terms of, let me say, which is the market we have considered for this kind of growth. Let me say that on this side, that the assumption we made in terms of win rate is consistent with our strategy of having a higher focus on discipline in terms of risk and discipline, therefore, in terms of increasing the resilience of our portfolio. It means that we have used a lower win rate than in the past than the experienced ones. And therefore, I would say that on one side, on this side, the resilience of our plan is quite solid. We have maintained a combination -- an appropriate combination between the strategy of reducing our risk and the growth of our revenues and portfolio.

And let me -- first of all, thank you for your question about the base of the market -- the addressable market in years to come. It is a difficult question because it's kind of a moving target. I can give you some color, as you would say. First point is that fortunately -- or unfortunately, the reference market is not just any longer the oil and gas market. If you take for infrastructure, we're trying to make an effort to pinpoint to the addressable market we see in that bit is the -- about EUR 25 billion of just the turning side of an investment wave in sustainable infrastructure that is coming. That's one bit. It's a tiny bit. But for instance, when you talk about -- when we talk about carbon capture plan or the size of 100 to 150, the market we have to look at is the CapEx of steel mills in industry in Europe, or around the world. Is the CapEx of cement manufacturers, is the CapEx of municipalities that needs to be recycling plastics, it's a difficult exercise. It's something that we have to project going forward, triangulating information we have in our shop. For instance, when we talk about robotics and maintenance services. The maintenance budget of this industry is relevant to the growth in that part of the market. And as we speak today, today, not tomorrow, today, if I put on a piece of paper, the sum, the potential kind of annual revenues of the contracts we're discussing potentially with people interested in the robotics, it comes to EUR 70 million, EUR 80 million. When is that going to be turned into revenues? I don't know. But it will be turning to revenue. But for the time being, next few quarters, next 18 months, there is an engine pumping that we have today. We -- literally today, we're kind of reopening activities of rigs in Saudi Arabia, we're kind of having ships moving to Angola, to Ivory Coast, to that kind of -- in Brazil, the things that we know. And I think I understand in order to put it all together is not that easy. It's not easy for us. But I am absolutely convinced that we have a new market opening up ahead of us and I need to take the company in that direction with a bit of courage. But obviously, credibility is of essence. And I gain some comfort in this trajectory from the capability that the company has: a, in delivering short-term growth because of our vessels because of our customer relationship, because of our contracts; and b, when I look at the competencies of our engineers, of the efforts of the projects that I look with our onshore team today and the robotics team in here in [indiscernible] These guys are talking to real customers. They're talking real projects. They're talking real concrete stuff. They show me how an investment in CO2 solution can deliver millions of revenues. It's not the EUR 2 billion, but the EUR 70 million, but that is -- I know it's difficult but it's something that we would together have to come to terms with, and I can't ask for kind of a white piece of paper or a check from you, and I'm not going to be asking that. But I'm saying, look, the strategy is built about a solid foundation of a business that has customer -- historical customer relationships in locations in areas that are now beginning to grow, and a competence base that can deliver against the needs that we see very clearly for a wider set of customers in the energy transition space.

That's very helpful. And just maybe just to kind of clarify what Antonio said, EUR 3.6 billion, the total project, but should we just assume a 1/3 is the number for 2022 for the work in Mozambique?

In '22, the impact on the current portfolio is the EUR 8.8 million. We have disclosed, that we had described in the presentation. In order to reach -- we expect -- make your estimation for our revenue next year, you have to consider this contribution, first of all, on which a part is related to Mozambique. And so it doesn't depend to us. But anyway, it is very solid for the rest. On top of that, you have to consider 2 main elements that we consider reality, concrete. The first of all -- the first one is the important growth we see in our current contractual arrangement for the drilling. So it is a reality. And the second one is the concrete conversation. More than conversation, let's say, that we are having with our clients and for which we expect good news in terms of new contracts starting from next week. So it is the combination of the current portfolio plus the growth for the drilling, which is, again, a reality based on the current contracts. And the positive situation we expect in the next month for the offshore boosting our revenues for next year. You are right. And also your colleagues are right, the 15% average is -- a growth is an average for the plan for next year, we expect, even if we have maintained a very prudent approach, we expect a growth which is higher than the average.

Ladies and gentlemen, time is over,and the Q&A session is closed. Mr. Caio, back to you for any closing remarks.

Well, I just -- for me to say thank you very much for your attention. We hope this was a helpful presentation to start a new dialogue with you. I hope that there will be opportunities to meet in person. We all love technology, but I prefer face-to-face meetings. And I'm sure there will be opportunities in the coming months to keep you posted on the steps, the very concrete step that we would be taking to deliver the new strategic plan for the new Saipem. Thank you very much.