Earnings Call: Q4 2012

Mar 1, 2013

Okay. Good morning, everyone. Thank you for coming to this results presentation, which we organize every year at around this time. Let me just summarize the highlights of the year for the group, and after my talk, we will have time for a Q&A session. 2012, of course, as we all know, was a very difficult year for Spain's economy, which of course has impacted the stock market. But the highlights of 2012 include very good operating results for our group, since our business is still solidly profitable and also extremely diversified geographically. We are, in fact, the top infrastructure group globally with a presence in almost every developed country with civil works and also industrial projects. Our sales, EBITDA, backlog, and cash flow generation have all shown positive trends, but our profits have been impacted by some partial divestments and a value adjustment for Iberdrola. With these earnings, we have been able to cut our debt net down to a half. An effort which has brought down our net debt by almost EUR 4.4 billion through asset divestments, including, amongst others, Iberdrola, as well as cash flow generation, which has enabled us to strengthen our financial structure. I would also like to point out that 2012 is the year in which we fully integrated Hochtief into the group, both in the accounting and operational strategic sense. That is already bearing fruit and will enable us to grow profitably in the future. More relevant figures for the year are up on this slide. Sales up 34.4%, EUR 38.39 billion. Although this increase was the result of the Hochtief consolidation throughout the year, so it is a perimeter effect as well as the increasing international activity of our businesses. In like for like terms, that is adding the Hochtief sales also to the first five months of 2011, which were not consolidated last year, our sales would have been up 4.1%. The group's EBITDA is at EUR 3.08 billion. That is also 33.3% larger than in 2011 due to the same perimeter effect. I would also like to point out the significant cash flow generation of our operating companies, which in 2012 generated EUR 3.08 billion in cash flow, which is 41.8% more than in the previous year. Finally, the group's debt net is currently at EUR 4.95 billion, which is 47% below that of 2011. As far as net ordinary profit or ordinary net profit, I would like to separate the recurrent earnings and then speak about the impact due to the Iberdrola writedown and partial divestment. Operationally, our businesses have performed well. Construction had a profit of EUR 274 million, very similar to last year's. Thanks basically to the better performance of Hochtief, which has offset the usual fall in sales in Spain. Environment, practically EUR 100 million, EUR 97 million in ordinary net profit, which is down 19%. But that was also because last year there were other businesses, including hospital waste and other logistic assets in our perimeter. Industrial services have the same net recurrent profit as in 2011, boosted by our strong international expansion, offsetting foreign activity in Spain, as we will see later. It has been, as I have said, a difficult year, but our profit levels demonstrate the solid performance and resilience of our businesses, and so we are optimistic about the future. Other ordinary net profit has evolved as follows. Our structural overheads have remained at the same level. We hope to continue containing them in the coming years. The other corporate costs, particularly financial costs, including the Hochtief acquisition, as well as the contribution of our other portfolio assets, have had a negative impact of EUR 43 million on 2012 results. Adding up all of these results, the group has obtained an ordinary net profit of EUR 705 million, which is 9.9% lower than in 2011. As I've said, our profit in 2012 strongly impacted by the impact of our Iberdrola divestment, as well as the divestment of other assets that we will review in more detail later. Net recurrent profit, as we've explained, EUR 705 million, but there have been several divestments bringing in various capital gains or losses. In 2012, we sold Iberdrola shares, 12% of their equity, with capital gain of EUR 97 million, and capital gains from the sale of other assets, especially 23.5% of Clece, EUR 125 million. We've also had to make a series of adjustments due to loss in value of some assets. Impairment for our Iberdrola investment was EUR 1.3 billion, with market value for our Iberdrola stake. We've also charged EUR 333 million to extraordinary expenses, including, amongst other things, provisioning for certain assets, particularly renewable energy assets, as well as financial expenses due to some restructuring of our debt. Overall, these concepts have had a net negative impact of EUR 1.9 billion, which we have charged to the year's results. I'd also like to, again, emphasize the significant effort we've made to cut our net debt practically in half. Specifically, in 2012, we've reduced our debt by EUR 4.4 billion down to EUR 4.9 billion, a reduction of 47%. To do that, as well as selling 12% of our Iberdrola stake and 10.3% of Abertis, 23.5%, as I said, also of Clece, but also we've sold some wind farms in Spain, as well as some transmission power lines in Brazil, transportation centers in Madrid, and Leighton has sold its urban waste management assets. We've also sold off some of our concession highways in Chile, Canada, and Spain. Additionally, our cash flow generation, as well as a more efficient management of working capital, have also contributed to the halving of our debt. On December 31, 2012, our net debt over EBITDA ratio was down to 1.8 times. Moving on to detail of our operating results. Sales in the period were, as I've said, EUR 38.4 billion. That's 34.9% higher than 2011. Although, again, as we said, in 2011, Hochtief sales were only included in the perimeter from June, and in like-for-like terms, sales would have grown by 4.1%. As a consequence of the Hochtief integration, the Construction division is now 77% of the group sales, bringing in a total of EUR 29.6 billion. Pro forma, including in 2011, Hochtief sales between January and May, sales or activities are up 5.3%. Industrial Services had sales of EUR 7.1 billion. That's 18% of the group sales. Environment has brought in EUR 1.7 billion, that is 0.3% more than in 2011, and is currently 5% of the group's total sales. All of our activities are growing outside Spain. Our internationalization strategy has intensified due to the Hochtief consolidation, with a presence in solid, consolidated markets like Asia, Australia, or the U.S., but also in Europe. Combination of the international business of all the group's companies demonstrate a strong geographical diversification of our revenue. Europe is bringing in 27% of the total, combining Spain and the remaining European countries. America is bringing in 32%, although that's mostly North America, where we obtain 27% of our sales, while South America brings in only 5%. Asia-Pacific, bringing in 40%. Basically, that's Leighton's business. As you know, the most relevant country in this region is Australia, with 32.5% of the group's total sales. Africa is 1% only of the group's sales. In total, in 2012, the group sold EUR 32.42 billion outside Spain, which is 84.4% of our total turnover. Our backlog has fallen in the last year by 0.8%, but that's mostly due to the divestment of Leighton's waste management business. Of the EUR 65.6 billion in our backlog, Construction, with over 49.2 billion, is 75% of the total. Environment is 14%, and Industrial Services, 11%. The group's total backlog is equivalent to 21 months of activity. As in case of sales, our backlog is mostly fed by our international contracts for a total of EUR 54.12 billion or 82.6% of the total. Asia Pacific, with 41% of total, is our main backlog source, also as a result of the Leighton mining contracts, which have a duration which is, on average, much longer than our infrastructure development contracts. North America is already 21% of our total backlog. Has grown strongly by 11.2% this year due to the activities of our construction area, but also industrial services, while South America is bringing in only 3% of our total backlog. The rest of Europe is also growing. I emphasize the waste treatment project in Essex in the U.K., and our Spanish portfolio backlog has fallen by 9.5%, as has been the case in the last few years as a result of the economic downturn. Our operating profit has grown significantly. EBITDA is up 33.3%, up to EUR 3.08 billion, which is an EBITDA margin of 8%. EBIT up 18.5%, up to EUR 1.58 billion. Our EBIT has been strongly impacted by the growth in repayments, particularly with the Hochtief consolidation, which is a more capital-intensive business, particularly the mining business. Now, in summary, let me just describe the performance of each of our business areas. Construction turnover in 2012 was EUR 29.7 billion. That's 49.9% more than the previous year. But as I've said before, this is due to the fact that last year we only consolidated Hochtief business since June, and this year it was the whole year. In like-for-like terms, our turnover would have gone up 5.3%. On the other hand, Dragados has experienced a fall in its national business because of the significant reduction in public works due to budget cuts in Spain and the fight against fiscal deficit, and across the line fall in building in Spain. On the other hand, our international business has grown significantly with an increased activity and backlog in the U.S., Canada, and Poland, mostly. Our construction EBITDA is now over EUR 1.99 billion. Margin is 6.7%. Our EBIT was EUR 685 million in the year. Also impacted by the amortization of Hochtief assets and also because of the lower margins in the German group. Net ordinary profit in construction was EUR 274 million, which is 1% down with respect to 2011. Our backlog for construction is now at EUR 49.2 billion. That's 20 months of activity. Fall in 2012 is due, as I said before, to the changes in the consolidation perimeter after the divestment of these waste management. By geography, construction turnover mostly coming from Australia, from the Leighton business. Asia Pacific is 52% of our turnover and 54% of our backlog. America, with Dragados and the Hochtief subsidiary business, with 31% of our turnover and 25% of our backlog. Europe, mostly Germany and Poland, with 11% of our turnover and 14% of our backlog. Spain is only already 6% of our turnover and 7% of our backlog. The ACS Group construction companies were awarded significant projects last year, including several contracts in Australia for our mining activities for a value of over EUR 6 billion. Also in Australia, Leighton will be implementing various contracts for natural gas liquefaction and regasification for major oil company customers. Amongst these, the Gorgon project, in which Leighton is building the port facilities for the plant with a budget that has risen by over EUR 630 million and is already at EUR 1.47 billion. Leighton, through its Australian subsidiaries, will also be carrying out additional infrastructure development projects for an amount of over EUR 1.1 billion. Leighton has also, outside Australia, been awarded major mining contracts in Indonesia, which is a country that is currently developing its mining resources for a total of over EUR 630 million in the year. In India, I will mention also the construction of an offshore gas pipeline in the west coast of the country for EUR 196 million. In North America, ACS companies are developing projects in both Canada and the U.S., including, amongst others, the concession project that we've just been awarded for the construction operation of a railway line in Ottawa, as well as projects of over EUR 1.5 billion, in which ACS has a participation of EUR 630 million. In Europe, we've been awarded significant projects in Poland for the construction of the S8 highway. In Germany also and a section of the high-speed railway line to Galicia. I'd also like to mention the group's strong presence through Iridium in North America in both construction and concession businesses. In the last few years, we've been able to become one of the main players in that sector. One of the latest projects awarded to Dragados was, as I said, the construction and operation of this light railway line in Ottawa, which is for us, really the best example of the type of infrastructure projects we seek in that market. I'd also like to mention the significant efforts made by Iridium, and in the last years, they have been awarded major projects in very relevant parts of the American market for a total of over EUR 5 billion, including, amongst others, concessions, again for the I-595 Ring Road in Miami, the toll road for the A30 Ring Road in Montreal, the South Fraser Perimeter Road in Vancouver, another ring road in Edmonton, in Canada, and the Windsor-Essex Toll Road between Ontario and Michigan in the U.S. I think it's a very significant sign of business success for Iridium and Dragados in North America. As for our environment business, turnover up 0.3% with EUR 1.7 billion. EBITDA EUR 241 million. That's a margin of 14.3%, down slightly versus the previous year, but that was mostly because of the divestment of our hospital waste business, Consenur, was the name of the company in 2011. EBIT down 5.4% to EUR 106 million, EBIT margin 6.3%. This is also due to increased amortizations since we have more waste treatment plants within the perimeter. Net ordinary profit, EUR 97 million, down 19.3% versus the previous year, mostly due to the Consenur divestment and also the divestment of other logistic assets that remained. Backlog up 2.9% at EUR 9.2 billion. That's 68 months of activity. By countries and geographies, environment has a very strong presence in Spain, but there's also quite a lot of business in France, the U.K., and some Latin American countries. Our backlog in Spain is 58% of the total, and the international business is now at 42%. Here, I'd like to mention the most significant contracts we've been awarded. That waste treatment plant in Essex in the U.K., I've already mentioned, for a total of EUR 997 million. That's a project which strengthens our internationalization strategy at Urbaser, together with our strong presence, as you know, in France and with waste treatment plants in Paris, Marseille, Bayonne, and Chalosse. These projects, together with our Urbason treatment plant in Spain, make us one of the leading players in waste management in Europe and globally. In Spain, during this year, we've extended contracts in the environment area for over EUR 410 million. We've also been awarded several new contracts, confirming the really recurrent and counter-cyclic nature of this business, including several waste treatment contracts, cleaning and waste collection contracts for a total of over EUR 100 million. With EUR 904 million, with a 12.8% margin. EBIT EUR 12.6, up to EUR 849 million, with a margin of 12% over sales. Net ordinary profit is EUR 416 million. That's almost the same as in the previous year. Our backlogs are up 4.2%, up to EUR 7.6 billion, which is equivalent to 12 months of activity. In this type of business, industrial activity, and with the growth rates experienced in the last years, I think it's worth mentioning. International activity in the industrial services area recorded sales of EUR 4.112 billion with a backlog recording EUR 4.616 billion. In addition to that, there is a 10.7% growth, which is the outcome of our stable footprint in geographical areas with high potential for growth, such as Mexico, Brazil, Chile, and Peru. The Americas account for 42% of our sales and 45% of the backlog, and undoubtedly, this is the main area of growth for the next few years. This map summarizes some of the main contracts awarded to the industrial services business unit over the year, including the works to build an offshore In the Gulf of Mexico, totaling EUR 351 million. Two photovoltaic plants, each one of those 75 megawatts, to be located in South Africa as part of the country's state energy plan, for a value of EUR 295 million in total. The contract for the concession to build a high-voltage line in Peru, totaling EUR 171 million. The construction of an offshore platform in the North Sea, in Norway for Statoil, totaling EUR 169 million. The high voltage line, it's an overhead line, between the states of Rio Grande do Sul, Santa Catarina, and Paraná for Angola, totaling EUR 94 million. The turnkey contract for the construction of infrastructures associated with the bauxite mine, the Ma'aden mine in Saudi Arabia. The control systems for the I-495 highway in Virginia, totaling EUR 67 million. In Europe, the installation of medium and low voltage electricity networks in the region of Liguria in Italy, for a total of EUR 14 million. Control systems for the high-speed train line between Madrid and Galicia in Spain. Let me talk to you now about the financial structure of the group. At 31st December 2012, the ACS consolidated balance sheet can be seen as summarized on this chart. Fixed assets, tangible and intangible assets totaled EUR 8.18 billion. Financial assets have been reduced quite substantially due to the fact that as a non-current financial asset, we are booking the direct stake of the group in Iberdrola at market prices, which includes 75 million shares. The remaining amount of our exposure to Iberdrola is booked through financial derivatives, also at market prices. The EUR 2.512 billion in net assets are maintained on our balance sheet for sale, are mainly the airports, the Hochtief airports, the renewable energy projects, and transport concessions. Net assets for deferred taxes are booked at EUR 1.235 billion. Working capital recorded EUR 2.698 billion. That is our debit position. The net worth totaled EUR 5.712 billion, including the balance of minority shareholders in Hochtief and Leighton. Net debt totaled EUR 4.952 billion, as I mentioned before. With regard to other non-financial liabilities, the total was EUR 2.728 billion, mainly due to provisions made for risks and expenses and other non-current liabilities. As I did mention earlier, our net debt figure totaled last year, EUR 4.952 million. It was reduced by 47% over the last 12 months. That figure is mainly composed of the following items: The Hochtief AG debt totaling EUR 1.164 billion, and the debt of the rest of the group, EUR 3.788 billion, which includes the acquisition of Hochtief, together with some syndicated loans, some bilateral loans, and some funding of our subsidiary company projects. This major reduction in the group's debt is due to two key factors. One, the funds obtained through the sale of assets, which in 2012 entailed more than EUR 4.325 billion. I would include in those assets the disposal of our stake in Iberdrola, Abertis, and other concessionary projects, Leighton, highways. The second factor are the funds that were generated by operations, which in 2012 contributed EUR 1.825 billion to the group, split almost equally between Hochtief and all of the other ACS companies. This level of net debt and the positive evolution of our activities has brought down our debt ratios quite substantially. Specifically, our net debt to EBITDA ratio is now 1.8. If we add the EBITDA and the non-recourse financing of projects that we are holding on our books for sale, that ratio would be 2.6. Net debt to net worth ratio for the group is now under 0.9 times. Nevertheless, despite those results, we will continue with our strategy of de-leveraging the company through this year, 2013, too. The divestment in Iberdrola, which I mentioned to you earlier, was key in this debt reduction over the last year. There were three things that we did mainly leading to this reduction in the cumulative debt of EUR 3.639 billion for the sale at different times during the year of 12% of Iberdrola, EUR 2.573 billion in debt was reduced. The equity stock structure change that took place with Natixis also reduced our net debt by EUR 1.066 billion. Lastly, we acquired a call spread on 597 million shares in Iberdrola, approximately 10% of its capital, which although it has had no impact on today's debt, in 2015, will bring in major cash flows, provided the Go up. We felt that the Iberdrola share price was too low at the time, and we would like to take advantage of any upside in the future. Let me explain now how we have reduced debt over the last few months. Hochtief increased its net debt balance by EUR 174 million over the last 12 months, mainly the consequence of a substantial impairment in its working capital, essentially in Leighton. It's important to point out that there was a debt reduction of EUR 718 million recorded by Hochtief over the last quarter because of considerable efforts made to reduce working capital in Leighton and the sale of some assets. The Iberdrola SPV, special purpose vehicle, debt was completely canceled, as you've just seen, and that meant a reduction in the year of EUR 3.639 billion in our debt. The rest of the group reduced its net debt balance by 917 million over the last year, mainly concentrated in Q4. This chart shows you the net debt reduction and cash flows. Operational activities of the group entailed cash generation of EUR 1.506 billion. Consolidated working capital, the total for the group, entailed cash outflows of 207 million, mainly for Hochtief. We collected in four divestments, EUR 4.781 billion, EUR 4.325 billion from our concessions in which we held a stake, and for discontinued activities, and the remaining 456 million for the sale of machinery and other types of equipment. The group invested, in 2012, EUR 2.17 billion, mainly Leighton, which earmarked more than EUR 1.1 billion for CapEx for its mining business. As you know, it's highly capital intensive. We also paid back to our shareholders a total of EUR 723 million. 179 million of that figure corresponded to the minority shareholders in the group subsidiary companies, mainly Leighton. The remaining amount of that EUR 723 million, EUR 544 million corresponded to the dividend payment for ACS. Lastly, we canceled, as I said before, the 1.066 million in equity subdebt with Natixis in December last year. The group also holds a number of assets available for sale on its books, including renewable energy assets, the stake in Hochtief airports, the telecommunications business, that's Leighton in Australia, a number of transport concessions, public facilities, and desalination plants, which I said before, total more than EUR 2.5 billion in net assets on our balance sheet. These investments available for sale have debt linked to projects totaling EUR 3.023 billion, which came down by EUR 691 million in 2012 because of the sales that I referred to earlier in my presentation. As a consequence of those sales, we have reduced our debt figure by EUR 775 million, while we have invested in those projects, EUR 326 million. Cash flows for operations have also helped us to reduce our debt balance in these projects by EUR 242 million. Our aim is to sell off this portfolio of assets over the next few months. In fact, we've already announced that we will be finding bids for our optic fiber business in Leighton, which we would hope to complete as a deal in the first half of this year. Our working capital balance has also varied by EUR 1.035 billion, a consequence of three different impacts. Firstly, the evolution of working capital, that's operating working capital in Hochtief, which was reduced by EUR 424 million. The other companies in the group have booked an improvement in their debit balance by EUR 217 million. Secondly, the impact of the interim dividend accrued in 2011 and paid out in 2012 has not been offset in the year. That is why there is this reduction of EUR 262 million in working capital. Lastly, the performance of accrued taxes paid, another reclassification of working capital, when we have reclassified and moved assets and liabilities to long-term instead of short-term, mainly for provisions of risks and expenses, have brought down the working capital by 67 additional million. The management of working capital is key for the company. That is why it's important for operational aims in each project as a crucial part of the performance of our cash flow, and therefore, debt. We will be very careful in how we manage working capital, and it will even be priority before growth. With regard to CapEx, let me just underscore the efforts that we have made to invest in 2012 in the group to develop our concessionary projects, as well as the efforts made to divest of non-core, non-strategic assets. Total investment was EUR 2.495 billion, where operational activities invested EUR 1.539 billion, and the group companies invested in concessions EUR 927 million. The corporation invested EUR 30 million in 2012. Divestments booked were EUR 4.781 billion, broken down into EUR 683 million in construction, EUR 128 million in environment, EUR 485 million in industrial services. And in the corporation, EUR 3.485 billion. The net figure was cash flow totaling EUR 2.285 billion. Let me highlight the most important items in our growth investments. In operational activities, Hochtief invested the bulk of the figure for construction in machinery and equipment, mainly for the mining business in Leighton. Without this impact, the rest of the companies in the group have hardly required EUR 280 million in investment for maintenance and development in our concessions. Infrastructure concessions, we've invested EUR 497 million. In industrial services, the investment has been EUR 430 million in renewable assets, in transmission lines, and the Castor project, completing the portfolio of assets for sale. With regard to divestments in construction, sales of equipment and machinery totaled EUR 250 million. Leighton sold off its waste treatment subsidiary for a total of EUR 153 million, and we've also sold concessionary assets in Chile, Spain, and Canada, as well as other assets for a total of EUR 280 million. In environment, as you know, we sold a 23.5% stake in Clece for EUR 81 million, as well as machinery and other operational assets in industrial services. Five transmission lines in Brazil were sold off for a total of EUR 346 million, wind farms for EUR 127 million, machinery and other assets for EUR 12 million, and lastly, the corporation also includes the sale of Iberdrola for a total of EUR 2.573 billion and our stake in Abertis totaling EUR 897 million. Now, we've seen operational results that we're reporting today have been very good, and that shows the sustainable profitability of the businesses we have in the ACS Group. We have reduced our net debt to half the previous figure, and we have also used our capacity to generate cash flows in our businesses, as well as selling off assets to bring in further cash. The accounting impact of the divestment in Iberdrola has been a major impact, of course, but obviously this has been a one-off, extraordinary result. It's non-recurrent that we believe we can actually recover in value over the next few years. Lastly, Hochtief is an important part of our group, and it is one of the platforms that we're using as a springboard for internationalization and future growth, which we will support and underpin our growth over the next three years. Over the next three years, we will be developing our strategy, focusing on three major goals. One, to reinforce our growth at a global level in our activities in profitable markets where we have already developed our business and in activities relating to civil and industrial infrastructure. We are also fully committed to profitability. We are rolling out our risk control system, essentially based on four elements, the core elements in our group. First of all, the way this will work, we will be looking at the selection of the country, so the country risk. Secondly, the size of the project. The third risk that we'll be including will be certainty of collection of capital in from the project. And fourthly, the execution of the works. The aim is for all the group's companies in their markets and activities to be profitable and for that profitability to be sustainable. And lastly, we will continue to reduce our net debt. We'll be selling off non-strategic assets and generating cash flows as a consequence of our operational activity. ACS is the only infrastructure development company with a footprint in all of the world's major markets, with large local companies, with a stable presence, and a commitment to customer service. This is an intangible asset that we have. It's the major asset, and it's also a competitive advantage that we are going to consolidate over the next few years, seeking collaboration and commercial coordination with all of our companies to be able to expand our activities all over the world. We believe that our reference brands, such as Dragados, Cobra, Hochtief, Urbaser, Turner, or Leighton, will be the pillars on which we will build up a fully global group. We believe that our capacity for growth has been proven over recent years because we have been able to coordinate and grow a major integration project. Since the acquisition of Dragados and right up to the consolidation of Hochtief into our group, ACS has been able to grow by more than 24% in annual terms in income. The revenues from the EUR 8.825 billion, that was our turnover figure in 2003, to the more than EUR 38 billion we are reporting today. There is no other construction company in the world today that has been able to roll out a similar project to the one we have rolled out, and we are absolutely convinced that we'll be able to continue to lead this industry at a global level over the next few years. This leadership that we are seeking must be reinforced by a clear quest to ensure profitability for the group. I believe that ACS is a group formed by great companies doing very profitable business in consolidated and growing markets. Our operational capacity is based on a workforce of more than 14,000 engineers with lengthy experience and specialization in major projects located all over the world in all different activities, in every single market. We have a unique and differentiated culture. I did mention this a moment ago in the way we are dealing with risk control. We believe that this makes our companies that can develop and share good practices all over the world. Our values, which are based on the entrepreneurial spirit of the people working for us, on excellent client focus, on a clear profit orientation and detailed control of risk, will be a guarantee of growth within the future. I believe that all of these factors together will help us to increase our profitability over the next few years. Once again, over the last 10 years, we have shown everyone that we are able to be profitable in our operations, to grow our profitability even at difficult times, like the current times with the crisis we are suffering from in Spain. We have been able to be flexible in the activities that we are running to be able to ensure that we are aligned with the needs of our customers and the economic situation. Example, efficiency in the management resource and operation capacity. The group's EBITDA has increased in year-on-year terms by more than 22% between 2003 and 2012, from $795 million back then 10 years ago, to the current $3.088 billion figure. If we analyze the evolution of the group's net earnings over these years, then I would underscore the resilience of our operational activities, which have generated close to EUR 7 billion in the cumulative figure year-on-year since 2003, with exceptional stability. The extraordinary results, the one-offs that have been the major change this period, even after the negative impact of Iberdrola this year. In cumulative terms, we have generated almost EUR 2 billion in extraordinary results. Out of that figure, more than half, $1.1 billion, corresponds to the profits contributed by our listed companies, Open Services, Neopansa and Iberdrola, and the remaining amount, $861 million, are corresponding to the extraordinary profits from operational activities, mainly from the sale of concessions and related businesses. In total, we have generated over 10 years, $8.894 billion in attributable net profit. Our financial structure has changed quite substantially over the last year in 2012 compared to previous years, and we have shown our capacity to adapt what we are doing to the requirements of our shareholders and investors who value reduction in our financial leverage that we have completed over the last few years. We have reduced our net debt to EBITDA ratio from 7.2 times, which is the figure we report in 2006, to the current 1.8 in 2012. All in all, for 2013, we are expecting an increase in our operational profitability. We expect to finish the year with a net debt figure for the group of around EUR 3 billion and to consolidate our global leadership in the infrastructure development industry. Thank you very much. That brings me to an end of this presentation, and we will move to the Q&A session. We will be delighted to answer any questions you have. Okay, good morning. I am Danielle Gandoi from JB Capital Markets. Where are you, Danielle? Oh, okay. I have three questions. First question is, I would like to know your opinion about Hochtief's message yesterday in their conference call, the guidance that they issued. Because there is, I think, quite a lot of difference between the Hochtief and the Leighton guidance, and is it because they are overly conservative, or is it that they have a pessimistic outlook for 2013? Second question is, could you explain what assets you are planning to sell exactly in 2013 to bring your debt down to EUR 3 billion, which you said was your target? And the final question is about your working capital. Could you give us a bit of a more detailed analysis of the trends we can expect to see in the year? Okay. Thank you. First, I would like to tell you that Hochtief guidance issued yesterday by the CEO, Marcelino Fernández, yesterday were definitely conservative, but it is to be expected of somebody who has only been at the head of that company for three months. Marcelino Fernández became CEO of Hochtief in April and then became CEO in November 2012. I think he is already having an impact, particularly since he has been appointed CEO, with the improvement in Leighton's business and profitability in the U.S., and will be felt very soon also in the German companies. Because as I said earlier, and as he said yesterday as well, he will be focusing entirely on profitability, that is in cases Value for the shareholders. To do that, he said three very important things. He said, "We're going to focus on our core businesses." That's one thing. Secondly, "We'll be simplifying our structure." Thirdly, "We will be taking advantage of one of our strengths," which he will be exporting to Hochtief, and that is the risk control system I explained earlier, and which I think has been one of the keys to the success of the group. We believe, or I personally believe, that Marcelino Fernández is the best in this business in Spain and in the world, and that there will be a clear turning point for Hochtief since he became CEO. Of course, it's only been three months, and so that's why he said what he said yesterday. This is what we have. You can be confident that we will meet our targets, which have been set at a very conservative level, but I personally believe that they'll actually be exceeding those targets by far. As for asset divestments, Hochtief, as Marcelino said yesterday, he spoke about airports, about selling the airports, and also the real estate, and the services. As he said yesterday, for Leighton, we'll mostly be selling the fiber optic network, which is well on the way. It should be completed, I think, very soon. That's for Leighton. Also, some real estate assets will be sold. Then, as you know, machinery is a very capital-intensive business. So at Leighton, they're working on a project to outsource the machinery with other partners to reduce debt levels. That's as far as what Marcelino announced yesterday in his conference call for Hochtief and Leighton. For the group, as you know, last year, we were unable to sell all our renewable energy assets for obvious reasons. Legislation, we're still waiting to see what's going to happen with the U.S. and the thermosolar plants, but we will continue to sell wind farms, the remaining wind farms, and the thermosolar plants, and some toll roads. We believe that we'll be able to reach that level of around EUR 3 billion in debt for the group, in spite of the investments which we will also be making, as I said earlier, because our business, particularly the concessionary business, does require investments. As for the working capital. Yes, the working capital, that's a difficult question. Well, it's difficult because this year you will have noticed that our operating working capital has come down by $200 million. Total is $1.036 billion, but we have reclassified some short-term to long-term. There's the dividends that were accrued in 2011 and paid out in 2012. But working capital is $207 million, which basically is $400 million down in Hochtief, and $200 million improvement in ACS, roughly. When you talk about our working capital now, it's not that I'm trying to dodge your question, but it is a hard question to answer because we have a lot of different markets with different seasonal effects, which do offset one another a bit. Then you have the huge impact for Leighton of the supplier payment plan. They've improved a lot in the first quarter. There will be a fall, however, in the second, but the second in Spain will not be as bad, so they may offset each other somewhat. As for ACS's international business, we do have an advantage in terms of working capital because you will have seen that we've been awarded some concessions for our highways and also the Ottawa railway line. Since these are concession projects, you can manage your working capital better than when it is purely a construction project. I cannot really give you specific guidance, but I do not think there will be a significant worsening. This year, most of you thought there would be a much worse level for our working capital, and it has remained at a very good, manageable level. We expect the same to happen this year. It will get a little worse, but not much. I am sorry that I cannot be more specific, but it is really hard to predict exactly. [Foreign language]. Good morning. We've been sent a number of questions over the Internet. There is a question from Goldman Sachs, once again, about the possible sale of renewable assets, and if there has been much of an impact on this business because of the regulatory changes here. There is also a question about our infrastructure concessions, if we are looking to sell any in the medium or long term. The question is not just about the sale of renewable assets, but also sale of concessions. As for the sale of renewables, as you all know, during financial year 2012, there was a lot of work done on changes in regulation, which certainly changed our expectations of the business, which is why we put in a provision of EUR 300 million. Turning to the concessions. Let me just have a look at my notes here. We, I believe, have certain assets available for sale. Let me just check the figure. There is the diagonal axis, a number of assets, but not the U.S. concessions because we are not able to unlock the value in them yet. What we do is complete the works, and then we can unlock the value in them and make them available for sale. That is not the position in the U.S. Let me see my list. Let us see those concessions. Yes, I believe I have them. As for renewables, one thing that is important that we have provisioned, as you have heard from the Chairman, EUR 300 million on our books for those renewable assets, by the way. On the wind side, the situation is a lot clearer. The framework is more clear-cut. CSP, concentrated solar power, has yet been really defined, and it seems there may be another new piece of legislation coming into play on the electricity sector, which does not really help. But essentially, we are looking at wind farms now. We have some investors who are interested, waiting to see when they can move on this because they have long-term interest in them. As for concessions, we would be looking at the price of them and whether we can get more or less profitability. But of course, an important thing is to see that these are attractive assets for investors, looking ahead to 20, 30 years of stable cash flows because the revenues are actually stable. We're talking to them, but we're waiting for the situation to have more clarity. In a structure like ours, you see, these assets do not add further value on your balance sheet because we do not expect regulation to have any upside for us for these assets anymore. So it's quite logical for us to try and sell them and get as much as we can for them. Going back to the concessions, yes, there are some highways. There's the Diagonal Highway in Catalonia. There's Castilla-La Mancha, two desalination plants. Then we have the renewable assets that we were talking about just before. We still have a couple of transmission lines left in Brazil as well as assets to be sold off. We're working on the sale of all of these assets, and I believe the question marks hanging over renewables have been removed from the picture practically totally, and we'll do as much as we can this year to sell off those assets. I'm Alejandra Pereda from Morgan Stanley, and I have two questions, both about the U.S. The first is, after several years working with Hochtief in several projects there, and since the profitability of your infrastructure project seems a lot higher than what Flatiron was able to manage, does it make sense to integrate your activities more in the U.S.? Don't you think that the way you've been doing things separately, you might be able to capture more market share in terms of the growth that is expected to accelerate quite significantly in the next few years? My second question is about the TIFIA funds for public-private partnership projects in the U.S. Have you seen any positive impact? It seems the funding is not clear yet. Can you give us some additional information about that? Right. In the U.S., we have a lot of business, both through Dragados and now Hochtief. Hochtief owns two companies there, basically. One is Turner. That's a very prestigious company, which hasn't really practically any risk. Of course, it's not as profitable either, but it is very well known, and it has a great reputation, and there's no other group activity competing with it. But for many years now, we have had a lot of activity in the U.S., both for infrastructure development projects. We have some of the biggest infrastructure development projects in the U.S. Just think of the Seattle project with a tunneling machine that I'm sure you've heard about, which is the biggest in the world, and that is really a model project. Then we have additional projects Through our concessions, we have five already. We combine Canada and the U.S. There, it's true that there is the company owned by Hochtief, Flatiron, which does compete with us for some civil work projects. For months now, since Marcelino Fernández became COO, the first thing he did was to coordinate Flatiron's activities with Dragados US and the other Dragados companies in the U.S. to coordinate their activities. We are part of the same group, and as you all know, you can't present two bids by companies of the same group, because they're immediately disqualified. The coordination is underway. I said that since he was appointed COO, he did what was needed at Leighton in the U.S. Now Flatiron, starting next year, as he announced, next year, will be breaking even, and that's definitely something that we have to coordinate, because it is really the least coordinated part of our business, because the group was working in three parts of the developed world, Australia, where there was very little competition between companies within the group, although there was some Cobra activities there, but it was basically Leighton in Australia. In Europe, you have Spain, which is basically, well, there's Hochtief in Germany, but really there's very little overlap. Where there was a bit of intragroup competition was in the U.S. But now that's being coordinated, and we will continue to reinforce that in the future. Basically, about a third, well, it's not even a third, a third, and a third, but it's almost like that in the three major developed markets where we have our main activities. That's how we're going to share it out. As for the U.S. market, of course, each state is quite separate and independent in infrastructure development in the U.S. But we are working quite hard, and I think now with the Obama re-election, there will be a significant boost for these projects because they need to update their infrastructure, because they need to create jobs, and because it's a country whose infrastructures really need urgent modernization. I've always said that the first time that they've built a tunnel in the U.S. with a tunneling machine was our project in the New York underground, and we're now building the biggest tunnel in the U.S., but it's also one of our projects. So it's a country that really needs to modernize its infrastructures, and they really need to use our systems. Alejandra, as for those TIFIA funds for PPP projects, as you know, we used them for the 595. It's the first time we used these funds. It is one of the easiest instruments available to the federal government to promote infrastructure development, and it seems that amongst the different projects that Obama has in mind, although it's not particularly innovative, he's planning to start to stimulate infrastructure development as an engine for economic growth in the U.S. It seems that they are going to support an additional budget line for these funds. I am not entirely sure whether it has been approved as part of this year's budget, but it is one of the instruments that they are planning to use mostly, and that is great news because you do not have to issue so much. They are increasingly thinking that bond issues for infrastructure development should only be used for the first part of the infrastructure development, and then you can issue bonds later on once the concession is up and running. In the meantime, you can use this federal funding. Hello, good morning. My name is Victor. I am from Société Générale, and I had a question for you about dividends. The interim dividend has not been paid out. Will it be paid out, or will it be a proposal going to the general shareholders meeting for perhaps a supplementary or final dividend? I understand that in subsequent years, you will be paying out the dividends once you are reporting profits. Are you looking perhaps at buying up treasury stock, scrip dividend payout? On the 21st of March, and I think we announced this, we will be holding a board meeting to file accounts and to announce the date for the general shareholders meeting this year, and to advise on the dividend and how the payout will be made. With regard to treasury stock, our goal is not to hold treasury stock. We have sold our shares, our treasury stock. We do not want to have a significant amount of treasury stock on our books. That is not part of our policy for the future. The question about whether we will be paying out a scrip dividend, part of our dividend in shares instead of cash. We have not yet had that board meeting. There is just 20 days to go before that board meeting, and that will be where the decision will be taken on the dividend payout. Okay. Ours, of course, is always very time-consuming. Okay. Luis Prieto from EcheBank, he is asking about the sale of airports by Hochtief. How is that going? Well, I can answer that very quickly. That should be answered by Marcelino Fernández, I think. As far as I have heard from him, it is going well. An investor is asking about debt in Q4. Could you say something on why, except for Hochtief, it has gone so well? I think debt did well because we have made a major effort to manage our working capital. Of course, we had the Red Eléctrica investment. That was towards the end of the year. Apart from that, we have made a major effort with our working capital, and also the Leighton debt level fell significantly because they have had a lot of impairment at the beginning of the year, and the last quarter was very good for them. Leighton and Cobra, in this last quarter, were the ones who were very successful at managing their debt level. Thomas Pinter is asking us about factoring. Has that grown or been reduced? I think it has gone down. To be exact, factoring in December last year, the figure was $356 million, and this year it was $307 million. Lastly, Tobias Loskamp from HSBC is asking us about Dragados. Dragados' performance in the Spanish market, and do we still feel that there will be a continued slump in activity in Spain, or have we hit rock bottom, and about their position? I think Dragados in Spain, as everyone knows, has suffered just as all construction companies have suffered here. Because the economic policy that has been followed by this government, on instructions from Europe, of course, has been to reduce the public deficit. Of course, the quickest and easiest way to do that is to invest less in public. I think we are at all-time low figure for public investment, public sector investment in Spain today. I think I can say that once these measures have achieved their goal, what the government wants to do is to reinvest again, to go back to investment. That is the quickest way to create jobs here. As I said, I think we are at the lowest possible point for public sector investment in Spain. This year, I think our results that we are expecting to report will be practically the same as last year for Spain, for Dragados. For Poland, while we do have some major road contracts there, road infrastructures, we do not have any big investment we are making there, but it is a country that we would like to coordinate the work we are doing there with Hochtief. As I said before, almost one-third of our European activity would be in Germany, Spain, Poland, and the U.K., mainly. Any other questions? Well, if not, then thank you everyone for coming and following our results presentation. Of course, we will be delighted to have a drink with you now.