Earnings Call: Q4 2011

Mar 1, 2012

Buenos días. Good morning, everyone. As usual, this time of year, we are together once again to present the group's results, in this case, for the year 2011. I would like to thank you all for being here. I want to thank everyone who is following our webcast. I am here, as usual, with Mr. Ángel García Altozano, who is the corporate director-general. During this presentation, we will review the main highlights of 2011. We will look in detail at the group results. We will conclude with our targets for 2012. At the end, we will have a Q&A to reply to any queries that you may have. I would like to begin summarizing the main events of 2012. As we said a year ago, the financial and economic environment has been difficult, but we have obtained good results in 2012. This year, we have reinforced our financial structure, improved our leverage, and lengthened the half-life of our debt. In 2011, we did long-term funding for a total of EUR 6.3 billion. In the year, we have refinanced a further EUR 1.4 billion corresponding to the ACS syndicate. I would also like to reinforce our commitment towards the divestment of non-core assets, which should be completed this year and which we will talk about in more detail later. We began 2011, as you know, with a major industrial transformation project together with Hochtief, in order to position the ACS group as the most profitable and largest group in the world in this sector. Finally, we continue to generate value long-term through sustainable and profitable growth of our industrial activity. Earlier, I said that 2011 was a difficult year from the operational point of view, but we have managed to achieve our target. We had given a guidance last year of 10% growth in recurring net profit. Today I can confirm that we have achieved that target since our recurrent earning per share has increased by 9.8%. Total attributable net profit, as you all know, as we announced yesterday, has gone down 26.7% because in 2010 we had major capital gains from the divestment of 15.15% of Abertis. Also, this year's capital gains, the capital gains obtained from the divestment of assets have offset the different loss items, some from Hochtief. Also, the ones that remained, we have allocated to not accounting the profit generated by Iberdrola for prudential reasons. Apart from the trend of net profit, other parameters in the year have evolved. As you see, because of the integration of Hochtief, our turnover was EUR 28.5 billion. That is practically double the turnover in 2010. Our backlog rose to EUR 66.15 billion, which is 22 months of production. EBITDA went up 61.9% to over EUR 2.3 billion. Our margins are 8.1%. EBIT went up 28.3%, up to EUR 1.3 billion with margin at 4.7%. This ratio has been affected by the increased amortizations due to the Hochtief acquisition. These figures demonstrate the magnitude of the transformation that the group is undertaking with the Hochtief integration. At the end of 2011, our financial structure was extremely robust. We have reduced our financial leverage and refinanced part of our debt. As a result, our total net debt was of EUR 9.34 billion, of which EUR 3.369 billion were net debt with recourse and EUR 5.965 billion were debt without recourse, mostly allocated to the Iberdrola and Hochtief acquisition. This debt level is equivalent to 3.6 times our annualized 2011 EBITDA. Excluding, or if we add the dividend that we received from our industrial stakes, the EBITDA to debt plus dividend ratio would go down to only 3 times. We have been able to refinance EUR 7.7 billion in the last 12 months, as mentioned, EUR 6.3 billion in 2011, and EUR 1.4 billion in these first months of 2012. ACS is still a company with great capacity for cash flow generation. This year, through its operations, it will generate EUR 1.287 billion. I have to point out that in spite of everything, in 2011, we invested EUR 4.75 billion, while divestments amounted to EUR 1.854 billion, and so net investment was of EUR 2.9 billion. As I pointed out before, we are committed to continue divesting non-core assets during 2011. We have agreed to sell several of our concession assets, which are no longer strategic given their maturity. In renewable energies, we have reached an agreement to divest 3 thermosolar plants for a total of 150 megawatts, 2 finalized in 2011. A third will be finalized this month. This year, in 2012, we will be divesting of the 4 remaining thermosolar plants in our portfolio for a total of 200 megawatts. In 2011, we also sold wind farms with an installed capacity of 255 megawatts, and this year we are already negotiating the sale of the other 753 megawatts remaining. We have also completed the sale of 5 transmission lines in Brazil. We had sold 2 in the past, and during 2012 we will be selling the remaining 9 transmission lines in Brazil. We have also sold 2 toll highways in Chile, Túnel San Cristóbal and Vespucio Norte, as well as a 50% stake in the I-595 in Florida. Hochtief has sold various mining operation contracts in Australia for EUR 356 million. In environment, we have sold Urbaser, which was our hospital waste treatment business for EUR 96 million, and several logistic assets for EUR 105 million. The total funds obtained in 2011 through asset sales were EUR 2.813 billion, EUR 1.691 billion from equity, and EUR 1.122 billion through the debt reduction connected to these projects and reallocated to date as liabilities linked to assets available for sale. During 2012, we will obtain over EUR 3 billion from asset sales without considering potential divestments at Hochtief. As I said at the beginning of my talk, in 2011, we have begun the strategic industrial transformation process through the acquisition and integration of Hochtief. As you know, in 2011, we acquired over 22% of the German company, so that from June 2011, we have consolidated their results and their balance sheet into our construction area. With this, we have a driver for growth, internationalization, and an opportunity to draw sustainable long-term growth and profit. This has been a major operation in Europe, and it positions us as the global leader in our infrastructure development sector, with a global presence with relevant subsidiaries in every market in which there are civil work investments, concessions, industrial services, or mining activities. This process is in line with our corporate strategy, which, as you know, is based on 4 basic goals for us. Global leadership, which we seek, will enable us to attract financial and human resources more easily and also continue to reinforce our diversification and internationalization through the coordination of the group's companies in a shared strategy. We have a clear opportunity to improve our operational efficiency by exchanging best practices and having a single efficient management of industrial risk in our operations. Size will also enable us to reinforce our solvency ratios as we continue to reinforce our financial structure. Finally, as I pointed out earlier, we will continue to promote an organizational culture completely focused on profitability, growth, and value creation. Now let me go into more detail into the results we reported yesterday. In 2011, we doubled our turnover to a total of EUR 28.47 billion. This number, Hochtief contribution since June 1st, was EUR 14.8 billion. As a consequence of the inclusion of the German company, our construction business is now 69% of our turnover, with a total of EUR 19.8 billion. Industrial services have seen a slight reduction of 1.6% in their turnover, down to EUR 7.045 billion, particularly in Spain, and they represent 25% of the group's total turnover. Finally, environment has contributed EUR 1.686 billion. That is 11.6% up on 2010, up to 6% of group sales or turnover. All of our businesses are growing outside Spain. Our internationalization has been reinforced by the Hochtief integration, with presence in markets with high growth potential such as Asia, Australia, or the U.S. Combination of the international activities of all the group's companies demonstrates the strong geographical diversification of our income streams, which come from Europe, which with Spain and the other countries, brings in 39%, the Americas with 27%, and Asia-Pacific with 33%. In total, in 2011, ACS obtained EUR 20.65 billion outside Spain, which is 73% of the total turnover. Also, our presence in Spain, which in 2011 generated a turnover of EUR 7.8 billion. We should mention the presence of the group in developed markets like the U.S. and Australia, as well as Central Europe and Eastern Europe, also in emerging markets with strong growth rates such as Mexico and Brazil, as well as a burgeoning business in Southeast Asia and the Middle East. In 2011, the group had a turnover of EUR 7.29 billion in Australia, EUR 4.9 billion in the U.S., EUR 1.4 billion in Germany, EUR 1.095 billion in Mexico, EUR 602 million in Poland and EUR 485 million in Brazil. For 2012, with Hochtief accounting during the 12 months in the year, the top three countries will have a significantly larger contribution. Our backlog has also grown 140% in the last year, mostly because of the Hochtief integration, but also because of our strong activity outside Spain. Annual contracts for a total of almost EUR 28 billion, which is practically the year's production level, with a total backlog of EUR 66.15 billion. Construction with over EUR 50 billion, represents 76% of this backlog, a number which is equivalent to 22 months of production. As in the case of our turnover, the backlog is mostly rising from international contracts for a total of over EUR 53.5 billion or 81% of the total. Asia-Pacific, with 43% of the total, is the main source of backlog, also as a consequence of Leighton's mining contracts, which have a longer half-life or mean life than the rest of our construction contracts. Spain, the rest of Europe and the Americas are balanced with around 20% each, which confirms the geographical diversification I spoke about earlier. As for our EBITDA, the Hochtief consolidation has been very significant, but the other areas have also performed very well, offsetting falling activity in Spain. In construction, our EBITDA rose by EUR 783 million, almost triple the figure of 2010. Most of that increase is due to Hochtief's contribution, while Dragados and Iridium had a small drop of just EUR 6 million. Industrial services contributed EUR 86 million more than in 2010, which means 10.5% increase, whilst environment has increased its contribution by EUR 16 million more with EBITDA, which is 6.7% higher. The group EBITDA has gone up 61.9% up to EUR 2.318 billion. Our EBIT went up 28.3% in 2011, up to EUR 1.3 billion. Construction contributed EUR 106 million more than the previous year due to the Hochtief consolidation, including EUR 168 million from the resulting amortization of the switch to global consolidation from the equity method. Industrial services has increased its EBIT by EUR 200 million, which is 31.8% more than in 2010. Finally, environment has a lower EBIT due to increased amortizations after the consolidation of the logistic services and increased activities in waste processing, which are a lot more capital intensive. These operating results have meant that the group achieved all of its targets in 2011 in net recurring profit. As I pointed out earlier, attributable net profit has gone down 26.7% to EUR 962 million, and this affected by a series of non-recurring earnings, amongst which I should mention first, that the profit from interrupted operations in 2010 included the contributions SPL and Clece. In 2011, it was only Clece. Capital gains in 2010 included the Abertis divestment, while in 2011, they include the divestments of the assets I listed earlier in renewables, transmission lines, concessions, and environmental assets that I listed earlier. In 2011, we have provisioned for potential reasons to offset Iberdrola's contribution, which you could see there is EUR 118 million, and after taxes, EUR 126 million. In this way, we offset all of those extraordinary capital gains, and the results we're reporting this year are pretty much all recurring ordinary profit. Finally, the non-recurring losses experienced by several latent projects in Australia and the Middle East, accounted in the first quarter with an impact on ACS of EUR 76 million, as well as other extraordinary adjustments to the profit for a total of EUR 57 million. So total net recurrent profit for the group in 2011 was of EUR 951 million, 8.8% more than in 2010. Earnings per share was EUR 3.21 per share, which is 9.8% more than a year ago. Now we will briefly describe the evolution of each of our business areas. In construction, turnover in 2011 was EUR 19.8 billion. That's almost four times as much as the previous year. As a result of the EUR 14.8 billion from Hochtief, as well as the strong impact Dragados has had a diverse performance outside and within Spain. There's been a fall in national activity due to the significant reduction in public works as a consequence of the fiscal consolidation strategy and the general reduction in construction in Spain. On the other hand, international activity has increased as a result of increased production and backlog in the U.S., Canada, and Poland, mostly. Also, in the construction area, we include the activities of Iridium, which is a company that develops concessions within the ACS Group, which contributed EUR 119 million in 2011. Our EBITDA in construction has been hit by the Hochtief contribution, which had lower EBITDA than Dragados. As a result, our EBITDA has fallen from 7.5% to 6.1%, while EBIT has gone down from 6% to 2.3%. Our EBIT has been doubly hit because it also includes the amortization of the PPA after changing the consolidation method for the German group in June 2011. In these seven months, that added up to EUR 168 million. This is an effect that can be seen in the fact that while Hochtief represents 75% of the turnover, its contribution to the EBIT is only of 27%. Net profit was EUR 370 million. That is double last year's, including the capital gains from the Chilean highways. The backlog is of EUR 50 billion. That is 22 months production, as I mentioned earlier. By geographies, the construction earnings come mostly from Australia, from the Leighton business. Asia-Pacific represents 46% of our turnover and 55% of the backlog. America, with Dragados and the Hochtief, Turner, Flatiron, and E.E. Cruz subsidiaries, contribute 27% of the turnover and 22% of the backlog. Europe, mostly Germany and Poland, contribute 12% of the sales or turnover and 14% of the backlog. Spain represents only 15% of the turnover and 9% of the backlog. By countries, Australia, the U.S., and Spain together contribute almost EUR 15 billion of that total. The construction companies of the ACS Group have been awarded significant contracts in 2011, including the contract for the operation of the Dawson coal mine in Australia for $917 million. In Australia, Leighton has been awarded the project to develop two major hospitals, the Royal Adelaide and the new pediatric hospital in Perth, for a total of over $1.25 billion. Dragados and Hochtief have been awarded the contract for the design and construction of the SR 99 tunnel in Seattle in the U.S. for a total of EUR 438 million. Leighton, also in Hong Kong, has been awarded the project to build a railway line to South Island for EUR 408 million. Hochtief Europe has also been awarded a contract for the refurbishment, operation, and maintenance of the A8 highway in Germany for EUR 382 million. Leighton has been awarded the contract for the Al Mafraq Hospital in Abu Dhabi for $278 million. Dragados has been awarded the contract for the Forth Replacement Crossing in Scotland for $250 million. Dragados and its business in Poland will be constructing two highways for a total of $245 million. Hochtief America has also been awarded the contract to refurbish a hospital and several attached commercial buildings in Oakland, California. Iridium and Dragados will be building, maintaining, and operating the A-308 in Granada, which is a EUR 200 million project. Moving on to the environment area, our turnover grew by 11.6% up to $1.68 billion. EBITDA went up $253 million, with an EBIT of 15%, up 6.7% previous last year. EBIT, on the other hand, went down 10.3%, down to EUR 112 million, with a margin of 6.6% due to the amortization, as I mentioned earlier, after reincorporating the logistics business. Net profit was EUR 128 million, that is down 15.8%, so profit over sales at 7.6% due to the SPL divestment, which you all know. The backlog has gone down 7.5%, down to EUR 8.9 billion, which is 64 months of activity for the same reason, because here we are consolidating only Urbaser, and last year it was also SPL. No, sorry, that is because of the Clece deconsolidation. SPL was the previous year. Sorry, it is Clece that is no longer being consolidated. 66% of our turnover comes from the urban services business, cleaning, landscaping, and so on, while 24% of the total comes from our waste treatment business. By countries and geographies environment, very strong presence in Spain, plus a lot of activity in France, Argentina, Morocco. Backlog in Spain is 63% of the total, while the international part is 37%. in 2011, we have negotiated and extended contracts in the environment area for over EUR 250 million and have been awarded new contracts confirming the really recurrent and anti-cycle or counter-cycle character of this business. In the industrial services area, we have seen a slight drop in turnover, which has gone down 1.6% to EUR 7.04 billion as a result of falling activity in integrated projects in Spain. Nevertheless, our results have been excellent. EBITDA has gone up significantly, 10.5%, with EUR 907 million, a margin of 12.9%. That is 140 basis points better than last year. EBIT up 31.8% at EUR 828 million, with a margin of 11.7% over sales. Net profit, EUR 492 million. That is up 23%, and ratio over sales of 7%. Backlog up 0.4%, up to EUR 6.875 billion. That is 12 months of activity, which in this type of business, and with the growth rates of the last years, is really remarkable. Industrial maintenance business brings in 62% of the total turnover, while integrated projects bring in 33%. The remainder, EUR 373 million, comes from the renewable energy generation business. International activity for industrial services has sales of EUR 3.4 billion and a backlog of EUR 4.2 billion. It is growing by 23% thanks to the stable presence in growing areas such as Latin America, mainly Mexico, Brazil, Chile, and Peru. America represents 33% of sales and 42% of the backlog, and there is no doubt that this is our main growth area for the next few years. This map summarizes some of the main awards of industrial services in 2011. Let me point out the most relevant ones in the U.S., the building project of the CSP plant for 100 megawatts in Tonopah in Nevada for an investment of EUR 587 million. Also, construction of the high-speed line between Medina and Mecca in Saudi Arabia for almost EUR 500 million. The turnkey construction of the central in Barrenive, Brazil, for EUR 262 million. The hydroelectric central in Guatemala for EUR 152 million. In Mexico, work for EUR 116 million. An oil drilling plant in the North Sea for EUR 96 million. In Spain, contracts for signage on roads for EUR 91 million. In Peru, we have also signed a contract for the new electricity plant for EUR 90 million. In 2011, the net contribution of our industrial stakes has been EUR 409 million. Abertis contributed significantly through its partial sale in 2010, and indirectly through the Admirabilia for EUR 36 million. Iberdrola has contributed EUR 373 million, thanks to the increase in our shares in Iberdrola at the end of 2010. The net contribution of Iberdrola has gone down by with an adjustment in value of EUR 180 million. As I have already said, we did this precautionary measure to neutralize the net contribution of this company to the results of the year and to reduce the value of the acquisition. To reduce the financial costs associated with these investments and to take into account the contribution of Iberdrola with a net contribution of these companies for 2011 has been EUR 36 million and corresponds solely to Abertis. Here I'd also like to point out that the market value of these shares at 31st of December 2011 was EUR 6.350 billion. Here we have a few further measures on the balance sheet related to investments and the cash flow and debt. The financial structure of the group at December 31 is summarized here. Our tangible and intangible assets are EUR 9.0 billion, and we'll give you details in a minute. Our financial assets include our shares in listed companies and other non-listed assets for the amount of EUR 8.9 billion. Those EUR 3.1 billion are the result of the reclassification of assets that are being held for sale, mainly those projects for renewable energies and transmission concessions. Other assets correspond to assets related to deferred taxes. Our working capital is EUR 3.7 million, which is an improvement of EUR 347 million with respect to the previous year. Our net equity is EUR 3.2 billion and includes more than EUR 2.3 million for adjustments thanks to the change of value. Due to the market value of Iberdrola, net debt is EUR 3.4 billion, and we will give you a breakdown of this debt position. With respect to other non-financial liabilities, they account for EUR 3.9 billion and are due mainly to provisions against risks and deferred expenditures and taxes. The integration of Hochtief has helped to compensate for the negative results of the working capital, thanks to the decrease in activity in Spain in the area of construction. In terms of the balance sheet, our working capital is EUR 600 million for a total of EUR 3.7 billion. In 2011, we've seen a significant increase in our fixed assets, tangible and intangible, and the reclassification of these assets, thanks to the consolidation of Hochtief, with a contribution of EUR 2.7 million in assets, apart from a goodwill, due to the PPA, to the amount of EUR 2.4 million. In 2011, we have made net investments and divestments of EUR 714 million. Amortizations and adjustments for value, with the exception of Hochtief, have also been for EUR 341 million due to sales processes of these assets. We've had the reclassification of these assets for EUR 2.0 billion. This reclassification, which mainly includes concessions and Hochtief assets, which are being held for sale, such as their Hochtief Airport, are EUR 1.1 billion in assets, which are being held for sale. The ACS group in 2011, has made very strong investments and divestments of non-core assets. Total investments have been EUR 4.8 billion, while divestments have been for EUR 1.9 billion, and that means net investments of EUR 2.9 million. Of the net investments for that period, let me tell you the most important ones. Hochtief has invested most of its figure in construction in Leighton, EUR 800 million, and nonetheless, this effect has been seen. In the other areas of the group, investments have been EUR 250 million. In assets and concessions and infrastructures, we have invested EUR 1.2 billion, and EUR 529 million and EUR 277 by Iridium in highways and in Spain and in Canada as well. Another 171 million, and 270 have been invested in highways in Spain and industrial services for more than EUR 600 million in renewable assets, and EUR 400 million in transmission lines. This completes the portfolio of assets for sale with new projects. Finally, as you know, we have increased our position in Hochtief, investing EUR 1.1 million. In 2011, we have been active in divestments as part of our strategy, and to sell off our non-core mature assets. Construction have concentrated most of these sales, and particularly Hochtief through its Australian affiliates in mining, where we attained EUR 315 million, and this has given us EUR 339 million. Iridium sold EUR 221 million to highways in Chile, 50% of the I-595 in Florida. Environment and waste treatment, and waste treatment in hospitals, and part of SPL International also brought in EUR 105 million. In industrial services, we started to sell off our renewable assets and our transmission lines. These activities will continue in 2012, and that has brought in EUR 400 million and EUR 223 million respectively, taking into account the debt associated with those sales. Perhaps the highlight of this position is the distribution of net debt with recourse and financing without recourse. In financing without recourse, we have a division between those vehicles that were established for the acquisition of Iberdrola and Hochtief for EUR 5.6 million. Then on the other hand, we have our debt to finance our concession projects with a balance of EUR 395 million. These vehicles include EUR 4.962 billion of debt of Iberdrola and EUR 608 million of debt of Hochtief. Nevertheless, if we look at what happened on the stock exchange yesterday, Iberdrola and Hochtief had a value of EUR 6.9 million. If we take into account Iberdrola, Hochtief, and Abertis, and we saw what the stock exchange showed us yesterday, then they were above EUR 1.932 million. In terms of net debt, with recourse, we have a balance of EUR 3.4 billion, and this corresponds to Hochtief's debt, and thanks to the consolidation, that was almost EUR 1 billion, and the debt of the rest of operational activities, which is EUR 337 million, and the net debt of the corporation for the amount of EUR 1.6 billion. These are all long-term loans. In general, we consider this debt position, which is 3.6 times our capacity to generate EBITDA. Three times, if we include the dividends of our industrial stakes that we think that this provides us with capital for all of the activities that are responsible for our growth. We think we have a robust position with the financing of Iberdrola and Hochtief, and we think that this is higher therefore, than the debt position. So I would like to show you some details of the movement of cash that have been undertaken this year. First of all, we have invested in the acquisition of Hochtief. That was EUR 904 million in cash and without considering the shares that we exchanged in the takeover in February 2011. So Hochtief contributes EUR 360 million of debt as of 31 May 2011. Operational activities of the group throughout the year have generated flow to the amount of EUR 1.3 billion, while payables and divestments have accounted for EUR 1.7 million. For 2011, we invested more than EUR 3.5 billion in activities available for sale for the amount of EUR 1.6 billion. We've also made dividend payments and the acquisition of treasury stock for the amount of EUR 869 million. This increase in debt of EUR 1.3 billion is basically due to the acquisition and the integration of Hochtief onto our balance sheet for an increase of EUR 1.4 billion. During 2011, we have been very active in the processes of refinancing debt, and we have been successful in extending the life of these debts to the amount of EUR 7.7 billion. The total of the debt, without recourse to finance acquisition of Iberdrola, has been refinanced to December of 2014 and 2015, in the same way that we have done it with the debt for the acquisition of Hochtief until 2015. To finish, let me summarize what we did last year and how we see next year or this year. As we said, 2011 has been a year full of important changes for our group. We initiated the process of integration with Hochtief, and we have increased our shares in that company, and this has been very fruitful, and we are committed to implement ongoing improvements of our systems to control risks within our company. Also in 2011, we have complied with guidance established a year ago, and this has been seen in terms of profits and leveraging, and we have made important investments and the divestment of assets to maintain our dividend position. In 2012, we expect to consolidate our global leadership in terms of operations, and we want to grow so that we will have a turnover close to EUR 35 billion, and we want to have an EBITDA of EUR 3.7 billion. We're going to continue reducing our debt. After our divestment we are going to conduct this year, we hope that without taking into account our Hochtief operations, we will have more than EUR 3 billion. So our net debt ratio over EBITDA will be well below three. That will mean that we will be able to generate more cash flow, and that will also make it possible for us to have a total net profit for 2012 at around 10% higher, and that will make it possible for us to maintain our dividend policy. Thank you very much for your attention. We are very pleased now to answer any questions that you might have. Good morning. I'm Emilio Razona from Kepler. I have a question. I have three questions, in fact. The first two are related to Iberdrola and the provision that you have made this year. I'd like to know whether this is a one-off situation, you're only going to do it this year, or you're going to be doing this in the future as well. I'd also like to know what the average price of the share was for the share of Iberdrola after those provisions. This year, as I've already pointed out, our capital gains, thanks to the sale of assets, compensated for a series of losses. But we thought it would be a better idea not to show capital gains for 2011, but to compensate for those with the profit that we were obtaining with Iberdrola. I think that this year, with all the divestments that we're going to be making, we're going to have lots of capital gains, and we're going to have extraordinary profits, therefore. Now, we could continue this policy in light of what we expect for this year, and we can also take into account the market value of Iberdrola. But as I've already said, we believe that it's more prudent to reflect our extraordinary income for this year with the competent, those amounts with the profit for Iberdrola, and to reflect the value of the acquisition of Iberdrola. Now I have another question. Can you tell us about the sale of Clece? What situation do you find yourselves in? Well, that sale is well advanced. I think in the next days, very soon we'll be able to announce the sale. But we don't want to make any announcements until the process has been completed, because we don't want to make partial announcements. Is the operation going to be similar to what's been already announced? No, I won't be able to answer that question. I'd like some details about the last quarter. What assets are going to be available for sale as part of that debt of assets available for sale? What can you tell us about that? Well, here we have the concession. We have the infrastructures that were maturing. These are our new entries in the assets for sale, and highways as well. RBC. I'm afraid my Spanish is not good enough to ask the questions in your language. Sorry. I was just wondering if you could give us a sense of, you say that the EBITDA is going to grow next year, the EBITDA margin. Given that Hochtief hasn't been fully consolidated for the entire year, and their margins are considerably lower than yours, I was wondering if you could give us some sense of how you do intend to increase the full-year EBITDA margin going forward. Also, if you could possibly comment on pricing in Spain. It seems that traditionally your margin has held up very well in Spanish construction, and I wanted to see if that was still the case. So on your underlying assets, whether the margin's still performing well. Also, if you are going to sell your renewable assets, I've asked in the past, and I've never really got an answer, what EBITDA margin or EBIT margin your renewable assets get. How should we see the industrial services margin going forward, given that you say that most of the gain in the margin is coming from the renewable assets? Thank you. Okay. Yes, to answer the third one, EBITDA, Florentino Pérez mentioned around EUR 2.7 billion for the coming year. This year has been a very difficult year to extrapolate. First of all, as you said, we've only fully consolidated seven months. This 2012, we'll consolidate 12 months. Also, the EBITDA of Hochtief / Leighton came very affected by the one-off situation of Leighton. I guess that the idea of getting to the EUR 2.7 billion is the business as in a normal situation, which is what, under all circumstances, we expect to happen. Second, in terms of margins in Spain, margins are holding relatively well. This is the combination of a couple of things. First of all, as you probably have seen if you go through the numbers, building business is being significantly reduced. Obviously, the mix between building and civil works is being altered, and building business is much lower margins. Also, we are in the latter part of the major contract where it's normally where you probably realize most of the profit, because the certainty it is revised there. In terms of your last question on how much the sale of renewables is going to affect EBITDA in the industrial services, we do not expect, obviously, it will affect them somehow. They are growing quite a bit internationally. We do not expect to have a severe blow because of that. So in our projection of the EUR 2.7 billion, it is incorporated the sale of renewables. Good morning. I'm Luisa Musatti from Sinus, and I have three questions. First, about industrial services. Traditionally, that's grown thanks to the development of your renewable business. That was part of your EBITDA margin. Now that you're divesting of that business, how are you going to maintain growth in that division? What are you looking at? Where are you going now? Then about the recent government announcement about the new payment terms by the public sector, how is that going to affect your working capital? What kind of timing? What's your impression on all that? Finally, when you spoke about a 10% increase in profit, is this recurring profit? Right. As for industrial services, it hasn't grown because of renewables alone. Do you mean turnover? Well, yes, that project can continue to build projects, but in the U.S. It's true that the future for renewable energy in Spain after the new law passed by the government, with the current moratorium on subsidies, what we're going to do is to complete the ones that we're building, but no new contracts in the foreseeable future. But in industrial services, as I say, our business is not operating renewable energy plants. We build them, basically. In the case of thermosolar plants, we have an excellent technology, which has enabled us to be awarded some contracts in the U.S. What has changed is the activity in Spain, which has shifted to the rest of the world. In the backlog, you've seen that it was 50% in Spain, and now it's 75% outside Spain. Plus, industrial services is a business area which we feel has a bright future, because I think it will have a lot of synergies with the Leighton and Hochtief companies, and with the American businesses too. As for your payment to suppliers by the public sector, I want to congratulate the government because it has, I think, corrected one of the biggest problems faced by businesses in this country. It will improve the liquidity of a lot of companies, particularly medium-sized companies, that supply the public sector, and I think it will prevent a lot of companies from having to file for bankruptcy. I believe it has been one of the most important measures taken by the new government, although the others have also been, I think, very important. It also is going to improve the reputation of the public sector. As for us, just town halls, town councils, without counting interest, owe us over EUR 1.6 billion. That's just local governments. We also have a significant debt of between EUR 600 million and EUR 700 million with the regional governments. For us, like for everybody else. Always talking about the recurrent net profit. I said that this year, if we meet all of our divestment objectives, I think we will have capital gains. From then on, then I think we'll be very cautious, and we won't include Iberdrola's profits in the results, or we will probably make other provisions. Juan Carlos Caro from Espirito Santo. I have a few questions. The first one has to do with Hochtief. While in 2011, you achieved a majority share and have consolidated the companies, what are your plans for the company in the future? Are you going to increase your stake in the company? Are you going to be integrating operations? What are the steps that you foresee taking? I'd also like to know about your renewables, and now it seems that this is an industry which is going to be subject to changes in legislation that will affect the whole sector. Do you think that this is a new risk, not on future projects, but will this affect the assets that you have in operation now? Is that going to change the profitability of these assets, thanks to changes in legislation, and will that affect the sales of these assets? Well, to answer your second question first, I think the answer is no. I think it was on the 20th of January. I do not remember the exact debt, but just a few days ago, a new law was passed whereby a new law that affected renewable energies, a moratorium on the renewable installations that are not in force yet. All of our renewables assets already are pre-registered with the ministry. Clearly, those assets are not going to be affected by that law and obviously clarified our position. We see very clearly what the moratorium is going to mean for future installations. Renewables are very important for us because we are selling our renewables assets off. We have very few right now, but we are following very closely what is happening in the sector because it is very important to us because we are the majority shareholder of Iberdrola. This is a sector which obviously is very important to us, and it is in a sector which is very important for the development of the country's economy. These are, of course, important utilities, and they generate a lot of employment. Of course, the government is aware of these things, I have no doubt. I think that we will be able to reconcile the interests of the big companies with the interests of society at large. With Hochtief, we have been advancing in this process of consolidation, which we began in June. We have very good relations with everybody at Hochtief, a new team, as everybody knows, thanks to our takeover and the last board meeting that was held. We are undergoing a process of restructuring, reorganizing the company and our groups after that last AGM. So that we can bring about that global leader that we hope to see. We have, of course, Hochtief is working in the United States, and so are we. We coincide in many markets, and we are going to work very hard, beginning next month, on organizing our activities in those markets, because those are the markets we are seeing growth in, the Asian market, the American market, and the European market. We are going to try to create the synergies that will benefit both organizations. There is a couple of questions coming in through the internet about this topic. Will Smith from Goldman Sachs is asking whether there is any concern with respect to the minority shareholder structure in Hochtief. There is a strong component of minority stakes in our balance sheet from Hochtief. Do we intend to change that or keep it as it is? There is also another question on whether there is any legal limitation preventing us from going above 50%. If there is such a thing, do we have a comment? No, there is no legal limitation. In fact, after the takeover, we can go up to whatever percentage we want. As for minority interest, as always, as we did with other acquisitions in the past, we want to, as I said, organize and fully integrate the businesses, but all of that through wide consensus and agreement. Right now, we are not planning to increase our stake. We feel quite comfortable where we are. Okay. Same questions from Goldman Sachs, and from them asking about construction in Spain. They are saying that the backlog and the new contracts awarded have decreased significantly. What is our outlook, and do we think we are seeing the end of the downturn? Well, in Spain, as everybody knows, with the current fiscal consolidation policy, the first cuts that were made were in public investment in infrastructure, and this, together with the real estate crisis, means that construction is a sector that in Spain has been performing very poorly and with no real end in sight. For the last eight years, since Dragados, we decided to internationalize our activities, starting in the U.S., which we felt was a very natural market for us. Based on the projects we had in Spain with the Madrid and the Barcelona underground lines, we were able to obtain the contracts, for instance, for the New York underground project. Basically, we just want Europe to be aware of the fact that in order to reduce the current staggering unemployment levels in Spain, they need programs to activate the economy. We hope that will enable us to halt the downward trends we have been seeing in the last few years in Spain. The next question is, what is our net debt target for the end of the year, and what about the refinancing of Urbaser, which apparently is the last refinancing you have left to do? As for the refinancing, Ángel will answer that. The net debt target, more or less, I think I said, we want to be at around EUR 2.7 billion. That is where our EBITDA will be this year. Net debt over EBITDA should be less than three, 2.8 probably, I think, more or less. If you work out the figures, that will, I think, be easy to figure out. As for the refinancing of the Urbaser loans, our debt, we have just begun. There is no urgency because there is still three months left till maturity, but it looks like it is going to work out fine. Plus, there was that government announcement recently, and so that has meant a great reduction of the pressure on the waste treatment businesses, because they are going to get paid finally what they are owed, which is nothing to do with the refinancing, but it does enable you to predict working capital trends for companies in this sector. So we do not expect any problems, and we expect that it will be completed in the next month. Any other questions? I am Victor from Societe Generale. I have three questions. Could we have some information, first of all, about your EUR 800 billion in outflow? Can you tell us the amount, how much of that is attributable to Hochtief? Then can you tell us about your policies in terms of treasury stock? My last question, and this is something that we saw in Bloomberg. I think Hochtief management said that they had a joint venture with ACS in Germany to explore new growth opportunities in transmission. So my first part of the question would be if in that market where you have a joint venture, what potential do you see for ACS, and what synergies can you foresee with Hochtief in other areas? Let's start with the last question. This was a spontaneous situation, because in Germany and in Australia, in those two markets, with the change of the country's energy mix, they're importing a lot of energy from the north and renewable energies. We're contemplating transmission from the north to the south. This was a Hochtief initiative, since this market that they are familiar with. While nonetheless they are not specialists, they provide services in this area. That's why they have undertaken this joint venture specifically to try to get into this market. Following the same philosophy, Leighton is also participating in initiatives for LNG plants. This is not a one-off situation. In fact, with our new position in Hochtief, these are simply natural outgrowths of this situation, because we're taking advantage of our own assets. The fact that we are in different geographical areas and that we all have products that complement each other, that's really put us in a good position to produce profits for the group. Oh, yes. Then we have the breakdown of the working capital for the year. Also my question about treasury stock. We've always taken advantage of opportunities here. We did this last year. I think we caused 6.7%. Sorry, 17.5%. With the money that we generate with these sales, that is why we've done that. In terms of working capital, EUR 250 million of those 800 and some, come from Hochtief. The rest is accounted for through construction in Spain and our environment division. That's thanks to the loss of market here in Spain in construction. Next question. Luis Prieto from Niche Bank is asking whether we can give more details about the divestment target of EUR 3 billion. Can we give a more detailed breakdown of the assets? The assets are all the plants we have left, which are, I think about four, the thermosolar power plants. The rest is the 750 megawatts from wind farms. I think there's about nine transmission lines left in Brazil. Basically, that's it. The odd highway, that's basically the list of assets available for sale. We are actually quite far along the process of divestment. Goldman Sachs wants some clarification about the outlook for Dragados International, because it seems that the backlog that has come in in 2011 has not grown as quickly or as attractively as it had done in previous years. Right. Since we're also in Hochtief, we are organizing our international growth in coordination with their activities as well. I think that Dragados business in the U.S. and also in the East, in Poland or in the U.K., have performed excellently. Plus, it's true, of course, that construction in general in the world, every country is experiencing cuts and some programs in the U.S. which were going to be implemented rather quickly are now being implemented rather more slowly than was originally planned. We think the future for Dragados lies outside Spain, clearly, and that's where we're focusing all of our efforts. To go back to what the Chairman was saying, Dragados international backlog has grown versus last year. It now has €5.5 billion in backlog. That's up versus the previous year. And that in the current economic context, both in the U.S. and in Europe, with projects being delayed, is significant because production volumes were large too, EUR 2 billion in production. We have replaced all of that production plus a bit more. One last question about Leighton. The little surprises we have seen now, because of these situations, are you thinking of sending somebody there to the steering committee? Can you share with us the information about any agreements between Leighton and Hochtief? What happened in Leighton, in fact, was what motivated change in the board of directors and the CEO. That has already taken place, and the new people who are there are really controlling the situation. That was an accident because Leighton is a big company, and it was able to rise to the occasion. We are very comfortable in Hochtief, and everything that happens in Leighton will do with Hochtief. We have one last question. Just on the working capital for next year, given that you are becoming increasingly construction-focused again, and construction tends to be working capital positive, would you expect an inflow for 2012? This is not an easy question. When you look at the activities coming from Hochtief, it has a significant amount in construction, but also it has a significant amount in working for the mining business. This is capital intensive in terms of CapEx, but the EBITDA level is pretty high. I guess it's a bit early to say because the fluctuation of this year, but we do not expect the construction will deteriorate. Don't forget that one of the problems we have had this year is because of the level of decrease of the activity of construction in the domestic market, you're actually paying suppliers corresponding to a high level of production. This is going to soften off because the amount of reduction has been very significant. We do not expect any major deterioration in regard to this year. On the contrary. A few months ago, we heard that a flexible plan was going to be proposed to the shareholder. Could you give us some information about that? Is the dividend going to go down? No. We will study other issues in the next board meeting, and we are looking at the possibility, and we did discuss this with the AGM to pay part of the shares. Yes, we are looking at some possibilities as far as the dividend scrip goes. Bueno. Okay. If there are no further questions, then thank you all very much for coming again, for joining us, and I hope that we've managed to clear up any doubts. Now we can enjoy a drink together if you have time to stay for a few minutes. Thank you.