Earnings Call: Q4 2019

Feb 19, 2020

The ACS Group. I am sitting here with Marcelino Fernández Verdes, CEO of the ACS Group, and Ángel García Altozano, who is Corporate General Manager of the ACS Group. After my presentation, we will have a Q&A session, and we will answer any questions that you may have. Let me start the year by summarizing the highlights of 2019 for the group. First, I would like to mention the excellent performance of our businesses in 2019, with net attributable profit at EUR 962 million. That is up 5.1%. Earnings that we have obtained in spite of the significant impact, EUR 420 million, of our decision to cease our construction activities in the Middle East, exiting the region, and provisioning all the risks connected to our investment in BICC. As you know, our Australian subsidiary, CIMIC, had a 45% stake in that company without operational control, and for some time had been exploring ways to reduce their exposure and divest of that stake. The worsening market conditions complicated the company's feasibility plans, and as a result, we had to take a drastic decision whose impact on our accounts we have charged fully to 2019. In spite of this, I would like to underscore our ability to generate cash flow from our operating business, specifically EUR 2.37 billion in net cash operations before capital investments. As you can see there, that is a 2.5% increase. This cash flow generation has enabled us to carry out the significant growth investments we have carried out, finance new projects, as well as increasing payout for our shareholders and maintaining our net financial debt at practically zero at the end of the year. We also have a growing backlog of projects in strategic markets for the group, thanks to the significant transport infrastructure and energy project awards in the year. I would also like to mention the group's strategy, which we have been deploying over the last few years along two basic pillars, maintaining a balanced risk profile in our businesses, reducing our exposure to higher risk activities and more volatile businesses, whilst concentrating on the more stable activities in the infrastructure sector. If we look at the main metrics in 2019, the figures are the following. Our turnover was EUR 39.049 billion. That is 6.5% higher than the previous year, 4.5% in like-for-like terms, that is, taking into account the Forex impact. A growth due to an excellent performance of all the group's businesses. Our backlog is at EUR 77.756 billion. That is 7.7% higher than in 2018, 6% if we take into account the Forex impact. The EBITDA was EUR 3.148 billion. That is 7% up with respect to the previous year, with an EBITDA margin of 8.1%, which is up 10 basis points. Our EBIT was EUR 2.126 billion. That is up 3.7%. The EBIT margin is down 15 basis points versus the previous year due to a change in our business mix with greater concentration in lower risk activities. Net attributable profit in 2019 was EUR 962 million. That is 5.1% higher than in 2018. As I have said, and as we will see later in greater detail, 2019 includes the provisioning by CIMIC from their exit in the Middle East, which have been completely offset with the profit or the capital gains generated from the sale of renewable energy assets for EUR 250 million, and the remainder, the EUR 170 million, have been covered with an item we have, which is called Provisions Linked to International Risks. Finally, our operating fund cash flow before investments was approximately EUR 2.4 billion. That is 2.5% higher than the previous year. I would also like to mention the group's net debt evolution in the last years. Since 2011, we have reduced our debt level by over EUR 9.3 billion and are currently at a level of less than 0.1 times EBITDA in 2017, and now currently at 0.02 times EBITDA. Since then, we have maintained a net financial debt, which is practically negligible. This solid financial position, at the end of 2019, our net debt was EUR 54 million, which is equivalent, as I was saying, to 0.02 times EBITDA. In fact, without considering project finance, without recourse to shareholders, the group actually has net positive treasury position, and in 2019, closed the year with EUR 87 million in net operating cash. Going into a more detailed analysis of our turnover, I would like to mention that our revenue sources are highly diversified by businesses and geographies, with a strong presence in the more developed economies. Our main sources are North America, with turnover, which is already half our total production, up 16.4%, Australia with 19%, Europe with 20%, and the remaining 11%, including the contributions of Asia, South America, and Africa. Backlog at the end of 2019 was EUR 77.756 billion, and the breakdown is similar to that of our turnover. I should mention that 86% of our backlog is also from developed economies. North America, with 44% of backlog and up 11.8% in 2019. Excellent evolution of our backlog in Australia, which now represents 25% of the total and is up 7.7%, as well as the recovery of our backlog in Europe, which is now 18% of the total and is up 8.6% in the year. As you can see in these charts, our main markets have had a very positive evolution in 2019. By countries, biggest contributors to our turnover are, again, the U.S. with 43% of our turnover, Australia with 19%, Spain with 14%, Canada with 4%, and Germany and the U.K. with 2% and 1%, respectively. These countries, overall, contribute 85%, practically, of our total turnover. I should emphasize the excellent performance of the American market, with sales in the U.S. at close to EUR 17 million, up 19.2%, while in Canada, over EUR 1.6 million, up 10.4% with respect to the previous year. Our turnover in Australia remains at EUR 7.3 billion. The Spanish market still seeing significant growth in renewable energy projects, with a turnover of EUR 5.419 billion, up 4% from the year. As for our backlog, there has been a strong growth in contract awards, particularly in the U.S. and Australian markets, which have contributed to the growth of the backlog. Specifically, the backlog in the U.S. was EUR 28.3 billion, which is up 17.6%, with relevant awards in construction as well as civil engineering projects and services. Backlog in Australia is at EUR 19.4 billion and up 7.7% in the year, thanks to an excellent trend in the awards of civil engineering projects. In Spain, the backlog at the end of the year was EUR 7.5 billion. That is down 3.3%. I should also mention the awards of the contracts for the high-speed train station at Old Oak Common Station, London, which has doubled our backlog in the U.K. in the last year. All in all, our geographical diversification guarantees the stability of our turnover if there are downturns in certain markets. Our construction turnover was almost at EUR 31 billion. That's up 7.5%. Excellent performance of our construction business is driven by growth in the U.S. and Canada, which represent about 60% of the turnover in this area. These two countries increased their turnover 18% overall. In Australia, the different businesses had a very positive trend, up 2.3%, adjusted by the Forex impact, thanks to an excellent performance of our construction mining and services businesses. Turnover in Spain, down 6.5%. Turnover in industrial services, EUR 6.53 billion, up 2.3%. As you know, the industrial services business has a very diversified and dynamic business model. Their services are diversified in various sectors where we have expertise, including industrial, energy, transport, and their activities can easily be exported, all of which are drivers to the profitability of the business. Renewable energy projects in Spain, as well as the execution of large industrial plant projects, more than offset the completion of major projects the previous year. Finally, service turnover in 2019 was EUR 1.579 billion. That's up 5% with respect to the previous year. Our exposure to the national market is 93.5% of our turnover, up 4.1%, whilst the European market, basically Portugal and the U.K., are 7% and grew 18% last year. The group is still focusing on the operational efficiency of each of its businesses. Our EBITDA infrastructure was EUR 2.421 billion. That's 8.1% more than in 2018. Our EBITDA industrial services was EUR 693 million. That's up 3.5%. Our margin over sales was 10.6%. That's stable with respect to the previous year and demonstrates the sustainability of our margins in this area, thanks to the diversification of businesses and markets. Our EBITDA in services was EUR 94 million, also up 7.6%, with a margin of 5.9%. That's 10 basis points higher than the previous year, thanks in part to the growth of our international activity in this business, particularly in the U.K. Our turnover in Abertis, our volumes, grew in the year thanks to very solid increases in traffic in the main countries where they operate. Spain with up 4.3% and France up 1%. Like for like terms, revenue in the period rose by about 4.2%. Our EBITDA grew 7.6%, whilst the like-for-like net attributable profit rose 9%. The strategic plan for Abertis is focused on improving efficiencies by reducing costs EUR 150 million annually and investing in new assets so as to replace different cash flow sources and diversify our geographic backlog. As you know, in October, Abertis and GIC signed an agreement for the acquisition of Red de Carreteras de Occidente in Mexico, which is one of the largest toll road operators in the country, managing five concessions with a total of 876 kilometers, which are located in the central western region of the country. Investment by Abertis for their 50.1% stake is approximately of EUR 1.5 billion. Net attributable profit, as I said, was EUR 962 million. That's up 5.1%, with excellent trends in all our business areas, and as I've said, with a neutral effect of discontinued or non-recurrent activities. Profit from the infrastructure area up 4.6% after the integration of Abertis in June 2018, and has contributed a full year, whilst it was only eight months the previous year. Our construction business includes Dragados with profit of EUR 117 million, and Hochtief, whose contribution to our net and operating margin dropped because of the change in the shareholding structure from our initial 71.8% stake to the 50.4% stake after our sale to Atlantia in Q4 2018. Without this effect, net operating margin from our construction would increase by 10%. Our net profit from industrial services up 7.8%, EUR 350 million, driven by a recovery of activity in the Spanish market. These earnings do not include the profits obtained by energy asset divestments, mainly the partial sale of PV plants in Spain in December 2019. Our net profit in services was EUR 38 million, up 3.3%. Although in previous earnings presentations, we have already explained in detail the earnings of CIMIC and Hochtief respectively. Let me give you a brief summary of the impact that BICC has had on our results. Worsening market conditions in the region have made it difficult to undertake the company's feasibility plans, as a result of which CIMIC has reconsidered its stake in BICC, which was 45%, but without control of management. Their decision to cease activities in the Middle East required a provision of EUR 1.145 billion net of taxes to cover all possible contingencies. This impact for ACS was EUR 420 million, minus minorities, as you see in the summary table. From ACS, we have allocated EUR 170 million of the Provisions Linked to International Risks we have in our balance sheet for international risks. This, together with the EUR 250 million in profit obtained from the divestment of renewable energy assets in 2019, have offset the negative impact of this departure from the Middle East. Let me now analyze the free cash flows from operations or the remaining operating cash flow available for new growth and investment activities and paying dividend shareholders. EBITDA that we made in 2019 was EUR 3.148 billion. Out of that figure, we paid out EUR 552 million in net financial expenses, taxes, and other items. That leaves us a total gross operating cash flow figure of EUR 2.596 billion. The variation in operating working capital led to an outflow of EUR 193 million in the year. The greater contribution of lower risk activities and the different profile of our cash flow funds explains the difference in that variation in the working capital if you compare it to the previous financial year. In addition, the sum total of the investments made in operations and the payment for operating leases totaled EUR 1.046 billion. Out of that figure, about EUR 700 million correspond to CIMIC. This increase in our investment is due to the strong growth in our more capital-intensive activities, such as mining services, whose business activity has been growing at an average rate of 20% per annum over the last three years. That takes us to a free cash flow total of EUR 1.358 billion, EUR 975 million are attributable to ACS. Once we strip out the flows that are attributable to minorities, that is Hochtief and CIMIC, and that is equal to 101% over our net profit. The cash flow from financial net investments and in projects total EUR 690 million. Let me highlight the following areas. Infrastructure, we invested approximately EUR 100 million there in the capital for our major road and rail concessions in the U.S., Canada, and Europe. There were also disinvestments totaling EUR 90 million, including the sale of the stake that the group had in a number of different concessions in the U.S. and Canada. Industrial services earmarked a total of EUR 674 million to developing different types of energy assets, such as photovoltaic plants, wind farms, transmission lines, et cetera, and localizations such as Spain, U.K., Mexico, and Brazil. There was also a EUR 340 million divestment made in different energy assets, such as PV farms and plants, wind farms, the transmission lines. EUR 170 million out of that figure was for the transaction of PV plants, which have still not been collected. The group maintains a net debt position in our balance sheet of EUR 54 million. That was at the close of 2019 financial year. The strong operating cash flow generation that we have maintained over the last few periods have comfortably offset the investment we have made in our concession activity and the increase in remuneration to our shareholders. I wanted to mention a number of the contracts that we have been awarded in construction, which have helped to make our backlog grow. One example is the PPP Cross River Rail projects. That is the new 10-kilometer metro line in Brisbane, in the capital in Queensland, Australia. There is a project also to expand the tunnel in Hampton Roads, that is Virginia. The building of Old Oak Common Station and the upgrading of Euston Station, so as to adapt the station to the new high-speed rail line in the U.K. The extension of the contract to provide mining services in Queensland, Australia. There is also the construction of a plant and a water treatment plant in the U.S., and the upgrading of the Monash Freeway in Victoria, Australia. Turning to the main industrial contract awards, I would highlight the engineering, the provision of supplies, and construction and testing of the floating offshore wind farm. That is in Scotland. Its normal capacity is 50 megawatts. Another project, basic engineering, detailed engineering, and supply of equipment and materials for the construction and implementation of two sulfuric acid plants in Morocco. There is a project also to extend 280 megawatts the combined cycle power plant in the Ivory Coast. Construction of two PV plants in Japan, too. Under the heading of services, there are contracts for aircraft cleaning for Iberia and Vueling in Spain, and also hospitals in Barcelona. The home help service contracts for Madrid City Hall, also for the city council in Durham, in the county of Durham. Let me now move on to the last part of my presentation to talk about our positioning in the infrastructure sector, which is still highly competitive and is based on four key pillars. One, we maintain our industry leadership worldwide that allows us to be a benchmark name in the industry. We also have a business backlog to develop and maintain infrastructure with a balanced risk profile. We can talk about that later if you would like to. Three, we are still detecting good opportunities for investment in our strategic markets that will allow us to grow sustainably and profitably over the next few years. Four, lastly, our financial position is still highly robust, and as such, it will allow us to take on future investments in concession projects and continue to give an attractive payout to our shareholders. As you know, the group is a leading company worldwide in engineering and construction sectors, as acknowledged by the prestigious journal ENR every year. We have been at the top of the ranking of international companies in engineering and construction in the world since 2012. We also hold a very relevant position in the different activity segments that we do business in. I can also add, too, that we are the leading construction group in construction management. We have the highest toll turnover under the cost-plus method because they know that we have no-risk contracts, and of course, that is our main company in the U.S. is the top one in the U.S. In construction and infrastructure development, our business model is more and more integrated with a risk profile that is highly controlled based on three key points in our strategy. The integration of our business model throughout the whole value chains, from design, construction, maintenance of projects, all infrastructure projects, right up to the operation of them, too. We have been also evolving our contractual models and our relationship with clients to make sure that we can keep tight control of the risks in construction development projects. Lastly, we focused our growth on developed markets that offer us a stable framework in operation, financial, and legal terms. As you know, our positioning in the whole value chain for the development and operation of transport infrastructures has been reinforced over the last two years by acquisition of a significant stake in Abertis. That stake has allowed us to increase our presence, our footprint in the sector and our infrastructure development companies, the greenfield infrastructure development companies, Iridium, Hochtief, PPP, Pacific Partnerships, still allow us to attract target opportunities in our target markets in North America, Europe, and Australia. That means that we can have better access to tenders that are coming up. Abertis, too, supported by its strategic partners, as you know, Atlantia, Hochtief, and ACS, is investing in operating infrastructures operated under concessions. I did mention before that controlling stake that we have recently acquired in RCO, the Mexican company, and we are exploring new opportunities in brownfield projects through that company so that we can diversify its portfolio and its revenue sources. Moreover, the group is still the leader in the infrastructure development sector and has been the leader for more than 10 years now. Specifically, the group has a portfolio of 94 concession assets, 70% of which are currently being operated. These assets account for a total investment that is under management of more than EUR 57 billion, and the investment that is committed by the ACS Group in these projects totals to approximately EUR 1.3 billion. About two-thirds of that figure has already been paid out. These figures show the commitment that we have with the development of concessions in our group, which we have very high expectations about as we move forward. The energy and water infrastructure sector is also a sector in which we hold a highly competitive position at the moment. We have a backlog of projects totaling 70 different assets, renewable energy projects, transmission line projects, desalination, irrigation, and water treatment projects, as well as other energy assets. Our renewable energy assets total almost 2,700 megawatts, including the megawatts that we've recently integrated in a sale agreement. At the end of the year, we're still in our portfolio. ACS's contribution in projects totals EUR 1 billion, the total investment of more than EUR 5.7 billion. The group has a very extensive track record in the green technology and renewable energy sector, as shown by the 180 projects that we've been developing with investment that we're managing, which is above EUR 14.5 billion. A second pillar in our strategy is to minimize our operating risk. To do that, we are focusing on three different strategies. One, we are making sure that the contracts we take on have a lower risk in development and execution, so we can make sure we can bring into alignment the interests of all different parties and have a more balanced risk profile. We want to be more selective, secondly, on the major projects that we take on with third parties, so we can keep on schedule for costs and deadlines that could be an initial risk. Thirdly, we want to promote PPPs and concession projects, where we can have tighter control of risks and cover the whole value chain. Lastly, let me highlight to you that we are growing in regions where the group already has stable footprint, and there are excellent prospects for very positive growth in the infrastructure sector. The ACS Group has already identified a portfolio of more than 150 projects, PPPs, for a total value of EUR 230 billion to be developed over the next four years. They are all located in the group strategic regions, as you can see in the recent changes in our project portfolio. As for the portfolio of projects to promote renewable energies, development of renewable energies, we have more than 6,200 megawatts, out of which 3,200 megawatts are in PV plants and 3,000 megawatts in wind farms. These figures show you that we are one of the most dynamic players in the sector now. Lastly, let me conclude this presentation by summarizing the main highlights and milestones of the financial year. First of all, once again, for another year, we have delivered on our growth, profitability, and debt targets. Secondly, we have enormous capacity for further investment, thanks to the very solid financial position we have in our balance sheet and our strategic position in the most developed economies that have high potential for growth. That also allows us to keep up a very attractive policy to provide returns to our shareholders. All in all, we hope to be able to meet expectations for growth and profitability over the next few years in line with what we've achieved over the last three years. In other words, the growth in net profit in like-for-like terms will be higher than 5%, backed by solid cash generation, our business activities. We will continue to remunerate our shareholders with a 65% payout of our profits. And thirdly, we will maintain a solid financial position with very low leverage level. Before I finish the presentation, I would like to say, and I always do like to say this, thank you very much once again to the more than 190,000 people who have made their contribution to the excellent results the group has achieved in 2019. 190,431 men and women who have worked together with us to make ACS Group a benchmark company in our sector and provide us with so much value. Thank you very much for being here today, and we will open the floor for questions. Thank you. Okay, good morning. I have a couple of questions. The first is about the strategy, given the evolution of the Hochtief, CIMIC, and ACS's shares. Might you perhaps consider being more active with maybe share buybacks or by acquiring a bigger stake in Hochtief for CIMIC? I'd also like to ask you about Dragados and the outlook for margins in that business. Thank you. Okay, right now we are not considering investing our resources to increase our stakes in Hochtief or CIMIC. What we are doing is thinking about two very important things. One is, we have about 75% of our business with very low risk. Turner, which is mining, and then there's the industrial activities and the concessions. The remaining 25%, which are high-risk construction projects, we want to decrease and focus essentially on completing those projects for our own concessions and our own businesses, thereby reducing the risk because we will be present in the whole chain end to end. And also we're focusing on modifying or desisting from some contracts where all the risk is taken by the contractor or the construction company. That's a policy which Marcelino will be explaining. We're already modifying contracts of that type in Australia and in the U.S., because our company, which already has these very solid four pillars, does not feel that it has to take on those risks. That's as far as risk management. And then as far as investing our resources, frankly, we prefer to invest in our own projects, in our own concession projects, which we will be developing over the next years. As I have said, we have a lot of opportunities which are a lot more profitable. What, Dragados? About the margin outlook for Dragados. We are very focused on margins in Dragados in order to reduce those risks, as I was saying, which in some cases are inherent to construction projects. As I have said, Marcelino will explain in more detail. We are looking at how we can mitigate or reduce or eliminate those risks, and that is an effort that will continue over this year because in some of the construction projects, there is higher risk, which we do not see the need to take on, frankly. We have begun this de-risking process for these higher risk contracts in the sense that the terms and conditions in the contract were, we felt, very imbalanced. In a lot of contracts already, and we started in the last two years, not just for new contracts, but also for existing contracts, we have started to open talks with our clients to see how we might, in an orderly fashion, balance the risks in them amongst the two parties. In fact, there are several contracts, current contracts, but we have already modified the risk profile, where we have already reached agreements with our clients so that the contracts will be more of the alliance type contract, as we have been saying. Which are contracts where the relationship is based more on an estimated budget, which enables you throughout the process to best manage the costs and the cash flows. When we talk about margins and our outlook and so on, what we are seeing is a convergence towards that sort of process, which are more of a cost-plus fee type arrangement with much lower risk, but of course lower margins as well, as is the case, for example, as our chairman was saying with Turner, which is purely a cost-plus fee company. It has lower margins, but it is very stable, very low risk, and it generates significant cash flow and has had significant growth. That is the process, de-risking. We believe that that is the right path to follow, and we are moving towards that goal from all directions. In ongoing projects, that could, at some point, obviously affect cash flow generation because as you know, in major projects, what we had was an upfront cash payment, which was very big, and then throughout the process that was gradually recovered. In these other processes or arrangements where risk is shared and where the only risk is that you might get it wrong and not inherent to the business itself What we are doing is to have a more constant cash flow aligned with the actual generation of revenues and costs. That is not something that can happen overnight. We started this process a couple of years ago, and in some places, we already have alliance type contracts in a significant number, say, 25% of our backlog. That applies not just to Dragados, but to all our construction businesses. Also in Australia, the Australian construction business is following the same process, and we are embarked on this ongoing dialogue with our clients so that we can gradually move in this direction. In fact, I think this year, you have already seen how in our margins, specifically in Dragados, as you have seen, there is a slight adjustment, which is basically due to that change. Yes. Good morning, Guillermo Fernandez speaking. I have a couple of questions for you. The first one is about your ex-Hochtief working capital, which we were familiar with. We knew about the changes there, but could you give more than EUR 300 million, I believe, in impairment, and could you give us more color on that? Where does that come from, and what is the reasoning behind it? Going back to Dragados, we do understand that the de-risking has a lot to do with some of the reduction in your margins, but you did not mention the word provision, but I am sure there will have been some additional costs there that you have had to take on in projects. Could you mention which projects and how much? Working capital, first of all. Essentially, it was EUR 270 million, I think, to be more exact, for the whole group. If you did notice, over the last quarter, we were able to recoup about 1.2. So it is about 1.4 now. It also has a lot to do with the type of contracts that are coming to end and the new ones that are starting. We have completed some pretty big contracts. So the upfront fees have actually come to an end. The new ones are contracts that do not have those advanced payments. With the combination of that, you have upfront money that is coming to an end, new contracts that do not have the upfront money, and that means that you have the modification there, the changes in working capital. Same for capital. So you have less upfront amounts that are being paid out. So the risk is certainly lower. The margins come down slightly. That is really the explanation. As for provisions, there have been no specific provisions made. They are just the usual provisions for our usual construction projects. There has been no specific endowment or provision for any big project, just the recurring ones. Whenever you are actually starting a new construction project, you put in your provisions, and you can release them if you do things properly. So as soon as you start the projects, you have more provisions. Let me just add to what Ángel said on that point. Yes, he is right. We are actually completing some of our major projects at this point. When that happens, there is a settlement that has to take place, and it is never done overnight. Of course, it takes a while to actually sort out the final financial side of it, and that's why you perhaps have those mismatches there that you're talking about. Any other questions from the room? If not, we'll start hearing questions from the webcast. Luis, go ahead. I'm going to try and be organized. There's been a lot of questions about Dragados and the performance in the last quarter, particularly, and the announcement by Tutor Perini on provisions for Seattle. Does that have something to do with the falling margins in the last quarter? What is the plan or the expected trend for margins in Dragados? I mean, long term. You've already said something about it, but could you clarify a bit more about that impact in the last quarter? Well, I think about Tutor Perini's comment. He was referring to that particular Seattle project. We had been very, in our claim, when there was that change for Seattle 15, we had some projects that were pending certification, and Tutor Perini hadn't done any of that beforehand. Their impact has been bigger. As for margins, we've already explained that as we reduce risk, naturally margins also tighten. But there has been a drop in the margin currently as a consequence of the new contracts of this nature that are coming in and the old contracts that are coming to an end. The next question is from Barry Norris. It is a question which is about our position in Hochtief. It is a general question. What strategically is the advantage of being in Hochtief? Seeing as it is a listed entity, what is the value for ACS's shareholders? What is the value for us is the question. There is also a question about the fact that Atlantia is a shareholder in Hochtief. Do we have any intention to increase our position there with them? Let me take that question about Abertis. No, it is Hochtief. Yes. The second was Abertis, was not it? The question was whether the relationship between Atlantia and Hochtief, how it affects us. I think that is because some news has come out in Italy, in the Corriere della Sera. Let me just say that the news is false. We have no interest at all in buying Hochtief or changing what we have there for a different controlling stake in Abertis. We talked to our partners about this. They know that this is not true. As I said before, our relations with them are excellent. We will continue to invest there in greenfield and brownfield projects through them. Even though we all have problems, and they have problems in this case with Atlantia, it is really on the sidelines. It is separated out from Abertis. We will continue to work quite intensively with them and with a lot of excitement. We have good relationships, so let me just deny that information that came out in Italy. We have said that already, I believe. What was the other question? Hochtief. What is the advantage for ACS shareholders in the long term of Hochtief as a listed subsidiary? It is not normal. Yes, you are right. We have a company which had a little more than 50% of Hochtief. Hochtief has 70 something percent of Well, yeah, it is true. It is true that we are thinking about this. We are thinking about how to streamline this structure, because sometimes we think it is a hard thing for us to explain to people. Investors have a lot of trouble understanding it. But it does make a big contribution to us. Hochtief is a company that makes a lot of money. We have less stake, but we do get the half of the money. At least we do have a big stake in Abertis through this. You can see the advantage there through the excellent earnings. But we are thinking long and hard about whether we would be able to simplify the corporate structure that we have, that we have a company that is listed, a company that is not listed, another company that is listed. Would you like to add anything? I think that you have said it all. But Hochtief, I would say, is a company that is highly diversified geographically too, is not it? Yes, especially in the U.S. Yes. Hochtief is a company that has three excellent assets. It is mining, that is Terna. That is 20%, is not it, of Abertis? So it is a company that does actually contribute a lot to us. The next question is very technical, but I perhaps should explain it. Patricia Garvizu from La Bolsa is asking us to explain the accounting impact of these Provisions Linked to International Risks. Is there anything left in that item? What was the source? What the impact has been in terms of the balance sheet? Well, it's actually quite a simple question, although technical. In a group as big as ours, we have various provision items in the balance sheet allocated to different types of risks, and one of these items is for international risks, for certain types of construction projects and others. And of that provision, which is quite a big amount, we have used up EUR 160 million to cover what we needed to offset the BICC divestment or impact. That really was the process. That item is on our balance sheet, and it's quite a big sum of provisions. There's really not much else to say about it. About this, someone from Santander is asking several questions, but about this, they're asking whether that payment pending CIMIC, which they've announced of some EUR 227 million that they're going to have to cover in 2020, whether that will match the tax credit that they've generated or tax shield that they generated. No, these are two different topics. One thing is the economic impact which exiting that market might have with the execution of different guarantees, which will occur over time during this year and perhaps even part of next year, depending on how the whole process, the exit unfolds with the liquidation of the company, and quite another matter is the tax issue, which is about the capital gains, which will be offset when and if they happen. Excuse me, Luis. I think it's pretty obvious what you've just heard, but what will actually happen throughout the year will be cash outflows. The impact has already been charged to P&L. But if 100% exits, there is 100% outflow, that's already been provisioned. Okay, and he's also asking us to clarify the sale to Galp of the PV plants in Spain, and whether we can give a bit more color on the value of what we sold, because there was the pipeline, there was the investment in the 414 megawatts that were already built and delivered, and what's the remaining pipeline for us in those projects? The divestment, the sale to Galp, was of a total of 2,194 megawatts, of which 915 are already operational. So they've been sold in full, let's say, and are operating. And these were the remainder, if you remember, of the 1,500 megawatts of the 2017 auction. On top of that, we have the rest, the 2,924 minus 915. That leaves whatever, 1,000 and something, which will be delivered in 2020, 2021, and 2022, plus 100 megawatts in 2023. The total value of that package was EUR 2.2 billion. EUR 250 now, plus EUR 850 in addition, the value of the equity. Our commitment is to build the parks, the PV farms that are under construction now, and it is not really particularly difficult. It is a set price, and you have your construction margin, as you would in any other construction project. There is nothing really else to say. In addition to that, there are two things. Some projects that are already in operation, which we have 410 megawatts in wind farms in nine different sites, 260 in thermal solar plants, plus some transmission lines. All the assets that were within Terio, which were not in the Spanish market in PV, because we have only sold the PV part, so that is still in our hands, and we will divest when it makes sense and when the price is attractive. In addition to that, we have, and this is a bit more general, a complete pipeline of 6,200 megawatts, which we have already identified and where we already have some connection. Of those, 2,230 are PV and the rest is wind. There is a big part of floating marine wind farms. We have quite a big award in Taiwan, and there is also some in Europe and in Spain and in Latin America. So these are all projects that we have some options or rights on, but they still have to be fully developed. It is quite an interesting backlog or pipeline of these 6,200 megawatts, which we are beginning to develop. Some will happen, some will not, over different time spans. The renewable energy business is a business which we believe, regardless of the different incentives and regulations in each market, are very attractive because reducing CO2 emissions, of course, is a global objective. Photovoltaic prices are currently unbeatable because cost-wise, they are much cheaper than any other energy. Of course, you still have to solve the issue of batteries to store the energy. But really when there is sunlight, and in countries where there is lots of sunlight, you have 12, 14, 16 hours of sunlight. The price is really unbeatable. Floating marine wind also has an advantage, because of course, wind speeds are very high, and because it is not inland, you do not have issues with spoiling the landscape and what have you. That is developing quite a bit. So these are the two areas that have the brightest future right now. In marine floating, we have Kincardine, which is the first project already in operation of its kind in Europe, and there are many other projects on the way. So we think this is a field that is going to be quite stable medium term. There are lots more questions. Let me pick out two. There was a question again about Abertis and the impact that the change in the credit rating might have on the payment of dividends. Could we clarify that or confirm whether or not the dividends will or will not be aligned with the expectation? Abertis' credit rating, this has been a discussion that really has been set aside already. Theoretically, Atlantia is the shareholder, which has defined Abertis as highly strategic for them in the rating terms. In other words, they cannot have more than two notches difference with Atlantia's own credit rating. That is the way things are legally. When you talk to them and you see that the company has a shareholders' agreement that does not allow any single shareholder to do anything that has not been agreed on with the other two, to pay out an extraordinary dividend or whatever, or make any investment that the other shareholders are not happy about, then there is a delinkage between Abertis' credit rating, Atlantia's credit rating, as they call it. So in principle, theoretically, they are delinked, even though Abertis is highly strategic for Atlantia, and we have no doubt about the fact that Abertis' rating will not be impacted at all, even though the other rating goes down. The dividend? We do not think the dividend payout will be affected at all. In fact, there is no reason at all why, if it keeps its rating there independent as investment grade, why should it be affected? Provided it still has its cash flows, and it does, and it will continue to grow. So we are not concerned about this at all, no. There is another similar question from several investors about the impact of the coronavirus scare in our businesses, our finance, our supply chain financing, and particularly whether that is why the supply chain financing- Has increased. Our business is that it does not really have any impact, luckily. Fortunately, can you hear me? It does not have any impact. Fortunately, you know what our markets are, and so our backlog is stable for the next two years. Plus, we hope that, of course, the whole thing will end happily in the next few months. But short term, it has no impact on us. There are lots of other questions. Let me just summarize a couple of them. There are lots of retail shareholders asking about the share price. What is happening to the share? Do we expect there to be an upturn in the midterm? What is the short-term impact? Do you think we could give them a little more visibility on what is happening with the share price? We are not going to explain to you how the value is set on our shares. The main analysts are pretty positive about the value of the company and our shares. That being said, we have had a bit of bad luck, quote, unquote. As you know, we have agreed to the payment of that scrip dividend, and we had to set the average value of the shareholding, which is for the days immediately subsequent to the announcement of the results of CIMIC. We did it then. We did it then, and of course, the average price of shares for the dividend payout was 30.45, I think. We said, "Okay. That is the way it is." That means that anybody who has shares higher than that price would, of course, sell them off and pick up the scrip dividend. We are obviously going to be affected by these turbulent times until the very last day of the time for the dividend payout. But this is what happens when you do things that way. Let me just add to that. Thank you to the analyst because the consensus. I hope you can hear me well enough through this microphone in the room. Yes, as I was saying, the market consensus, the analysts' consensus is higher than EUR 40.18 per share. It has been stable like that despite this accident, if I can call it an accident, even it was not a major accident, but it has had some consequences. The reasons to buy are always the same. I think there are the same number saying to buy, three to hold and two to sell. We are absolutely certain that as soon as the issue of the scrip dividend is all over, then our share price will be valued as it should be. Guillermo, again, there is a couple of questions which I did not ask before, and one is, could you tell us a bit more about the conditions under which the tax credit, the EUR 550 million in CIMIC could be activated? How much time do you have to offset it? And what kind of transaction, whether a one-off or any BAU activity? You always give us a bit of guidance on potential sales or acquisitions. I have not heard anything this year, so if you could give us Yes, but that is fulfilling the previous one. Okay. Same objectives plus 5. Okay. In the last 15 years, as far as I know, we have been always meeting our guidance. We are quite conservative, as you know. As I said before, we have these four very important pillars in our strategy for the group, which are the ones that guarantee the stability that we seek. Turner, the mining, the industrial business, and the toll roads, the toll road concessions, with Abertis as well in this case. What we are doing is with all those other things which have slightly more risk, as Marcelino has said, we have a de-risking, dilutive strategy so that we can maintain our stability, as I always say, with the Real Madrid strategy, too. As for the tax credit that has been generated, it is due to a loss in credit and financial investment. As a result, you can offset it with a financial gain. That would be through any of the multiple divestments that you can make, which might generate capital gains. There is no pressure on that. We just have the desire to take advantage of that at some point because it could help us also have a stronger balance sheet. So it is a process which will happen in a natural way, but we are not forced to execute it or apply it short term. Okay, great. If there are no other questions, I want to thank all of you for coming. I think that we have been able to answer all the questions that concerned you. We feel optimistic about our future, and I am sure that I come here once a year, but I am sure that a year from now, I will be back here and sharing some more good news with you and excellent earnings as we predicted. Thank you.