Earnings Call: Q4 2015

Feb 26, 2016

Good morning, ladies and gentlemen, and thank you very much for joining us at this earnings report presentation. I do it every year with all of you. I apologize for having changed the time, but I'm going to try to be faster in order to save time. After this presentation, there will be a chance for you to ask questions in order to clarify anything you might have questions on. First of all, let me highlight the four more important aspects of our earnings in 2015. First of all, we believe that the group has sound results in a difficult macroeconomic environment, but we have a global leadership position in infrastructure development, and we're growing at a sustainable pace, especially in developed markets such as the U.S., Canada, and Australia. Secondly, and this is very important to us, we've achieved a strong cash generation, EUR 2,009 million, thanks to the good performance of our activities, first, and also thanks to a good management of operating working capital in spite of divestments by CIMIC in 2014 and the sales of renewable energies at the beginning of to continue to significantly reduce our net debt, which stands at EUR 2,624 million, EUR 1,090 less than a year ago. It's a drop of 30%, 1.09 times the 2015 EBITDA. I would like to highlight the very good competitive position we're in globally, thanks to the changes that we've introduced in the group over the past few years, and which have made the group the global leader in the infrastructure industry, as you all know, after internationalization, which we started because of the situation in Spain several years ago, and although we integrated Hochtief five years ago. We started a transformation process to have a sounder, diverse ACS, a more geographically diversified ACS, so we're not exposed to small markets. This enables us to mitigate the cycles in certain countries. An ACS which can provide quality to its customers and something which is even more important in the attractiveness for our shareholders. As I said, in 2015, we achieved our objectives in a difficult environment, and the results are the following. Our sales have grown by 0.1% relative to last year. They stand at EUR 34,925 million. If we don't consider the contribution of renewable energy asset sales during the first quarter 2015, sales have grown by 1%. EBITDA stands at EUR 2,409 million, down 5.6%. That's also due to the sale of assets of renewable energies. Otherwise, EBITDA would have grown by 3.6%. EBIT stands at EUR 1,541 million, down 8.5% for the same reason. Without that impact, growth would be 5.8%. Net attributable profit to the group stands at EUR 725 million, up 1.1% relative to 2014. Debt EUR 2,624, 25.5 less 1.09 times EBIT. Looking at a closer analysis of our sales, our source of income is very diversified geographically. We have a global presence, mostly in more developed economies. The regions where the group generates its major activity is North America, where sales have accounted for 40% of the total. Asia Pacific, mostly Australia, which account for 28%, and Europe, 25%. In South America, it is 6%, and in Africa, we are below 1%. Thanks to this geographical diversification, we have been able to mitigate the adversities of the macroeconomic environment and also the cycles inherent to construction activity on small markets. We have taken advantage of growth opportunities on those larger and more favorable markets, and we have consolidated our presence in countries that have a larger growth potential. The more important countries as far as turnover are concerned is the United States, Australia, Mexico, Germany, Canada, and Spain. Spain accounts for 17% of total sales. In construction, sales in 2015 have been EUR 25,319 million, down 1.9% relative to 2014. This slight decline is mainly due to the decline of mining in CIMIC. As you know, there has been a transformation at CIMIC to provide customers a more competitive and flexible service, and it has also improved its operating margins. Without this impact, construction sales would have been up by 0.6%. In Spain, activity is slightly down, although there is more stability after seven years of drops. The national contribution to sales amounts to 5%. In North America, growth is mainly due to the United States, where production is up 25% thanks to the projects awarded in the second half of 2014, which are now being executed. 44% of the total construction sales are generated in the United States. In the Asia Pacific region, sales are down, as I said before, because mining activity is lower in Australia. Most of the production comes from Australia, with 24% of contribution to total sales. Europe has a contribution of 9% with a drop of 15.4% relative to the previous year, mostly in Germany. In services, sales were EUR 6,501 million, down 3.7% relative to 2014. This is due to the sale of renewable energies, which have a larger data and turnover. Without this effect, sales would have been up by 0.6%. That is, they would have been practically flat. International activity grew by 1.2% and is now at 66.7% of total sales. The larger contribution to international activity is in North America, mainly in Mexico, which accounts for 24% of total sales. The sound growth in the Asia-Pacific region, plus 42%, is mainly due to contracts awarded in the last years in Saudi Arabia, Japan, and United Arab Emirates. I would also like to point out that integrated project activity is down. It is 7.9% down due to the completion of large projects and to delays in the new awards. This reduction is offset by growth of 8.3% in industrial maintenance activities. In the environment, turnover was EUR 3,139 million, up 4.9%. As you know, Clece was consolidated 100%. So in comparable terms, it is 4.9%. To a great extent, this growth is due to the international expansion of Urbaser, especially in the U.K., France, and Chile. The environment is very important in Spain, and it is supplemented by its activity in developed countries, mainly in treatment plants. Activity in the U.K., France, and the rest of Europe grew in 2015 by 7%. Activity in Spain grew by 38%, but it is mostly because of Clece consolidation during the year, the integration of Clece during the year. The group's EBITDA has reached EUR 2,409 million. As I said before, it's down 5.6%, mainly because of the EBITDA that renewable energy assets had. Without taking into account the contribution of these assets during those 2 years, the EBITDA of the group would have grown by 3.6%. By areas of activity, operating results show good performance. Construction EBITDA, EUR 1,438 million, up 2% relative to 2014. The margin stands at 5.7%, 20 basis points up, thanks to the measures introduced in Hochtief and CIMIC over the last year. This has led to a substantial improvement in operating profitability. Industrial Services without the contribution of renewable energy assets. EBITDA there has been EUR 649 million, which is 0.6% more than in 2014, and the margin is stable at 10.1%. Environment EBITDA is up 17.6%. The margin is at 10.9%, which is slightly lower than previous years. In homogeneous 2015, the group's net profit was EUR 725 million, with a growth of 1.9%. All of the group's activities have performed well. Their contribution has grown by 13.1% to EUR 691 million. Construction is up to EUR 304 million. That is 36.42 Hochtief's profit after this transformation process, and also thanks to increasing ACS' stake in Hochtief. Industrial Services has a net profit without taking into account the contribution of renewable energy assets of EUR 314 million. It's practically flat relative to the previous year. Environment profits have been EUR 73 million. That is up 1.4% relative to 2014. These results show how sound our operating activities are, our capacity to adapt, our flexibility, and the recurring profitability, which is going to be our goal in the coming years. In this changing environment for infrastructure companies, the group has placed importance in the sustainable generation of cash flows through its activities. In 2015, cash flows from operating activities before working capital variations have reached EUR 1,384 million. That's a stable figure relative to the same period in 2014. Performance has been good in spite of higher taxes for CIMIC and a smaller contribution of activities due to the divestments of renewable energy assets in Spain and the sale of John Holland and Leighton Services in Australia. The net working capital at year-end has increased. The credit balance by EUR 1,624 million. By the year end 2015, it was EUR 2,980 million. The improvement in working capital is due to, first, the substantial improvement in operating working capital as a result of a more effective management of customer balance with more stringent checks on works. We've generated EUR 625 million in funds in the last 12 months. This improvement was in all areas of business, both in Hochtief, thanks to the transformation process, as well as in Dragados and Servicios Industriales. It's also due to the collection of the divestments in John Holland and Leighton Services. As you will remember, that was agreed upon in December 2014, and they were collected during the first half of 2015, and taxes were paid. This sound cash generation from operating activities and the good performance of the working capital have enabled the group to generate funds from operations before investments of EUR 2,009 million. That's an increase of EUR 1,185 million, up 144% relative to the previous year. After the total net investments, the group has had a free cash flow in 2015 of EUR 1,616 million. We've used that to pay our shareholders. Net investments during this period were EUR 393 million, and they were made up of operating investment needs, EUR 336 million. That is 45% less than the prior year as a consequence of lesser investment operating needs, especially in the mining industry, where the investment volume in the last years was higher. Also, net divestments in concessional projects and other assets, they were EUR 254 million. I will give you more details about that later. We have also devoted EUR 311 million to increase by 5.84% our stake in Hochtief. That was done in October when an investor decided to sell its stake. Gross investment during the period were EUR 2,228 million. To highlight the most important items, operating needs. In the area of construction, EUR 354 million were invested, mainly investments in machinery and mining equipment by CIMIC, EUR 177 million. In Industrial Services, just like last year, EUR 29 million were invested, and environment devoted EUR 124 million to operating investments. Regarding investments in concessional assets, the Industrial Services area, in addition to the investments for Saeta's IPO, EUR 316 million have been invested in different energy projects, mainly renewable energy assets in the Americas. Construction, EUR 69 million, especially in Iridium, and the environment has devoted EUR 44 million to concessional assets, mostly for the Essex treatment plant in the U.K. Lastly, as I said before, the main financial investment was the purchase of 5.84% of Hochtief by ACS for an amount of EUR 311 million. I would also like to point out that the investments of Hochtief Corporation basically correspond to cash adjustments from the financial divestment of a construction underwriting company without a net impact in the cash flow. Regarding divestment, they were EUR 1,835 million. Machinery and equipment were sold for EUR 173 million, mainly in CIMIC. There was a divestment of EUR 85 million. Concessional asset sales, EUR 1,108 million, with the sale of 75% of Saeta Yield after its IPO in February 2015. The sale of 50% of the energy project developing company to GIP. Then there was the sale of Line 9 of Metro Barcelona, the Hospital of Majadahonda, and the A30 highway in Canada. Financial divestments, they include the sale of the construction underwriting company without a net impact on Hochtief's cash flow, and there were also other assets that were sold. All in all, as I have said, the funds generated by the investment activities in the group stood at EUR 393 million in 2015, thanks to operating net investments of EUR 336 million, net divestments in concessional assets, EUR 312 million, and net financial investments, which include EUR 311 million because of the acquisition of 5.84% of Hochtief. As I already stressed to you at the start of my presentation, the group's net debt figure has fallen by almost 30% this year. This has been possible thanks to our sound cash generation capacity, both through operating activities and also the outcome of a working capital control policy overall. Both sources let us generate EUR 2,009 million in 2015 before net investment, also remunerating our shareholders. You can see we have used EUR 345 million for the payment of ACS dividends, as well as to our shareholders in other subsidiaries and minority shareholders, mainly Hochtief and CIMIC. Also, we've used EUR 507 million to buy up treasury stock for ACS and Hochtief. The final net debt figure at the end of this year stood at EUR 2,624 million. That's 1.09 times the EBITDA figure for 2015. That's a lower debt ratio than we had originally set out the target for this year. I'd also like to stress the tremendous efforts that we've been making since the start of 2012 to reduce our debt level, where we decided that we would reduce the risk level in our financial structure in the group. We had a few bad years. We took the decisions, and we have managed to bring down our debt by 72% from EUR 9,334 million. That was 2011 year-end figure with a ratio that is above four times EBITDA to EUR 2,624 million. That's year-end figure 2015. The ratio is now 1.09 times the EBITDA, as we've already said. This structure means that we can be more sound financially, more competitive commercially, in an environment in which flexibility and the ability to adapt and to evolve are key if we are to maintain the leadership that we have, as well as continue growing. Our efforts will not stop there. One of our key focuses at the moment is to optimize our financial structure. That is to say, make it more flexible and reduce our financial expenses. We've done some good work in Hochtief there, where we will be seeing a positive impact on the financial expenditure there during this year, 2016. Not only have we been able to reduce our gross debt figure, but also we've been able to improve and streamline our financial structure. We've refinanced and restructured the debt. The gross debt position of the group at year-end 2015 stood at EUR 10,632 million. That is a reduction of more than EUR 1,600 million since year-end of the previous year. Out of the total gross debt figure in the group, EUR 6,061 million, 57% of the total is accounted for by bank loans, credit lines, and also leasing lines. EUR 3,844 million, 36% of the total debt corresponds to bonds issued by Hochtief, CIMIC, and ACS, including the EUR 533 million in exchangeable bonds for Iberdrola shares. The remaining amount corresponds to project finance, EUR 541 million, with no recourse to ACS and other financial liabilities amounting to EUR 268 million. The debt linked to concessional projects for assets that are held for sale has also been reduced significantly to less than EUR 500 million, and that means that the total reduction of the gross debt of the group this year has been more than EUR 3,600 million. The net debt figure for the group is essentially at the corporate level and also in the environment area because it is such a capital-intensive business. Construction and Industrial Services stand with a positive net cash position. We are working to improve the management of liquidity at the level of the operating subsidiaries with a view to improving the efficiency in the management of financial resources without harming in any way the operational mission. That is one of our hallmark features. The year-end consolidated cash position in 2015 was up to EUR 8,008 million, made up of EUR 5,804 million in cash and EUR 2,205 million in temporary financial investments. Include balance of 90 million shares. That is the Iberdrola shares at market value pledged in the exchangeable bonds that were issued in 2013 and 2014, as well as the EUR 200 million in collateral on financial derivatives that the group holds over the next few quarters. Quite obviously, this process of restructuring our balance sheet has had an impact on the financial expenses of the group. In 2015, we successfully reduced by significance associated with our debt. Currently, about 70% of the financial expenses are linked. The remaining amount are linked to those bonding lines and other warranties and technical guarantees that are necessary to be able to carry out our activities. On the other hand, the cost of restructuring stemming from that process of rationalization of our financial structure, such as commission fees for early redemption or cancellation or cost of other derivative instruments such as the cost of commercial discount instruments. The reduction of those financial expenses linked to assets held for sale are mainly due to the divestment of renewable energy assets. The implicit interest rate has been reduced from 5.43% in 2014 to 4.53% in 2015. I would like to highlight the implicit cost of the debt in the last quarter of the year, and that was 4.27%. We have streamlined and rationalized the structure, which has also had an additional positive impact and will have an impact in 2016. Following the refinancing and restructuring process, we now have debt that is better structured in terms of maturity and cost. Close to 70% of our debt has a long-term maturity date, and almost 40% is not callable before 2020. Likewise, the almost EUR 3,300 million with maturity in 2016 are made up of EUR 533 million linked to those exchangeable bonds in Iberdrola shares, which even though they have a maturity date in 2018 and 2019, they are actually booked as short-term because the bondholders do have the option to exercise early exchange. EUR 1,876 million in different credit lines and commercial paper. That is the European program, Euro Commercial Paper Program, which is automatically renewed. And the remaining amount, EUR 852 million corresponding to many different loans, financial instruments in the different operating companies of the group, with maturity sometime during 2016. As I did say at the start of my presentation, I think that the ACS Group is today in a better position to be able to compete in the sector of infrastructure development, in less than a decade in which we have really undergone some important strategic changes. We have gone from being a mainly local competitor to being a global leader in our sector. Ten years ago, in 2006, ACS was the leader of a booming Spanish market. Our sales were around EUR 14,000 million. EUR 12,000 of that figure were generated at a national level, and we had a workforce of 123,000 people. Today, the group, ACS, is the leading construction company worldwide, with sales of EUR 35,000 million generated mainly in the international market. Essentially in the most developed countries with a workforce of approximately 200,000 employees right now. Throughout 2015, we have endeavored to maintain our position of leadership and consolidate our position in markets that we consider to be strategic because they are politically stable, because there is stability in regulation terms, and because of the business availability and the potential for growth. Overall, our backlog has grown by 5% to EUR 67,000 million. The breakdown by geographical areas, Asia-Pacific with more than EUR 22,400 million. That's 34% of the total, including both the contribution of mining projects, which are capital intensive, long lasting, as well as the development of infrastructure and industrial projects in Australia, Hong Kong, and the Middle East. The backlog for mining services activity is gradually getting smaller. Thanks to the projects of infrastructure that we are developing more and more. Secondly, we have North America, which contributes almost EUR 20,300 million, 30% of the total. Thirdly, Europe, with almost EUR 18,800 million and 28% of the backlog. Fourthly, South America, that contributes 7%, EUR 4,550 million. Lastly, Africa, making a contribution of 1% of the total. I'd like to underscore the major growth that we have been able to obtain in the last two years in North America. This is a strategic region for us, both because of its potential for growth, thanks to the current investment process in PPPs, both in U.S. and also in Canada. As I've said, the backlog in this region has grown by almost 50% over the last two years, thanks to the good performance of Dragados USA, Turner, and Flatiron. In addition, 42% of the total of the contracts in the group in 2015, more than EUR 16,400 million, took place in this region. Overall, the current backlog, the backlog in North America stands at EUR 20,200 million, broken down into 75% U.S.A., with a growth of 61% of the backlog in the last two years. 15% Canada, where the backlog has grown by 61% over the last year, and 10% Mexico. That's a growth of 30% over the last two years. As for South America, what we are expecting to see over the next few years is strong investment in this region, both in public and private projects, to be able to reduce that mismatch between supply and demand in infrastructure. Asia-Pacific, that region where we are the leader, currently accounts for 34% of the total backlog, as I've already said. This reduction in our mining business, which has also been negatively impacted by the fall in prices of commodities, does distort the good performance of our project backlog in infrastructure, which has grown by 90% over the last year, thanks to the increase in civil works and concession contracts. Australia is the country with the greatest weight of the region, 21% of the total backlog, and where we are expecting greater growth over the next years because the country with high deficit in infrastructure, consistent population growth, and also very little debt in the public sector and good capacity for spending, as well as with a financial system and pensions that favor private financing. Europe, 16% of our backlog. Mainly Spain, 12% in the rest of Europe, mainly Germany, U.K., and Poland. This is a region which is currently stagnated. We expect there will be further growth over the next few years. Furthermore, the excessive leverage and public government deficit here in Europe, especially in the southern European countries, is restricting by a major fashion the public investment. The backlog for contracts and construction stands at EUR 48,874 million. That is equivalent to 24 months of production. This figure is 7% up because of the major activity we have in America, mainly North America, and also in South America. The key projects 2015, design and construction of the new highway, M5 in Sydney. That is more than EUR 1,700 million. It is an underground highway that is being done jointly, CIMIC and Dragados. There is also the contract for design and construction of the new Light Rail line, Toronto, Canada, EUR 976 million. The design and construction of the new bridge over the St. Lawrence River in Montreal. That is EUR 848 million. We also have the contract for the construction of the high-speed rail system in California. That is 100 kilometers long, EUR 811 million. The construction of a border checkpoint between Hong Kong and China for EUR 800 million. Turning to Industrial Services, our order book totals EUR 8,421 million. That is equivalent to 16 months of production, and it is up 5%. That is a good figure. Mexico is continuing to grow. It accounts for 24% of the total. For this segment of Industrial Services, South America is 21%. Asia-Pacific has grown by 33%, and it is already 16% of the total. This growth has mainly come from the business growth in Saudi Arabia, but also other countries, Japan, Israel, and Australia. The growth of our backlog in Spain is worth underscoring to you. That has recorded a growth of 4.6% thanks to very recently awarded projects, but mainly in maintenance. Out of those key projects in 2014, let me mention the contract for the electrification of 420 kilometers of the railway network in Israel. That is EUR 386 million. An engineering construction of a combined cycle plant in Tuban, Saudi Arabia. It is all capacity 500 megawatts, EUR 340 million. The construction of the Miguel Hidalgo de Tula refinery plants. That is for diesel production. Mexico, EUR 173 million. The supply and assembly of electromechanical facilities, three substations, electricity substations around Saudi Arabia, EUR 164 million. The maintenance of traction, overhead lines, electricity lines in Spain, electricity substations. All of this associated with the high-speed rail links, Adif in Spain, EUR 71 million. Also work on the combined cycle plant in Mexico. That is 625 megawatts, EUR 58 million. Lastly, environment EUR 9,776 million. That is a reduction of 3.8%. However, there has been international expansion in CIMIC over the last few years, and it's grown by 2.4% in contracts outside of Spain. I would not like to end my presentation without, of course, spending some time underscoring to you this transformation process in Hochtief that we are now successfully completing, I would say. It's a process during which we have changed the DNA, both of Hochtief and CIMIC. We've turned them into more efficient, more profitable, and more competitive infrastructure development companies. I think that is the key value that we have been able to contribute, to add to these companies with our presence and with our control of them. I'd also like to just run through the key milestones of this process. In 2012, we appointed a new management team in both companies with a set of very clear targets and objectives and a very well-defined strategy in line with the group. We've also rolled out some unified risk and management systems with some profitability targets for all of the companies and quite a clear approach on managing the operating working capital. We've seen that in 2015, of course. We've also restructured in organizational terms, these companies, mainly in CIMIC, creating these four areas of activity: construction, mining, PPP projects, and engineering. We've sold off non-strategic and non-core assets, as you know. We've also reduced our net debt and have now positive cash position. Now, all these measures that took place between 2013, 2014, and 2015 are now giving us very clear results, operation results and financial results. As you can see here on this slide, on the bottom half, we've been able to successfully, very significantly improve our operating earnings and financial results with an annual compound growth figure for EBIT of 25% the last three years and a change in the cash flows that we're generating. Today, ACS is a more efficient, more balanced company with potential for profitable growth. Its key characteristics allow us to be right up there at the top as a benchmark company that people turn to in the sector. We're a global leader. We have solid track record worldwide. We have a very diversified portfolio, both in geographical terms and also in the business activities that we run. We have been able to comply with and deliver on our targets in difficult and changing environments. We're absolutely convinced that with these assets that we hold, we have a potential for profitable growth. We're still growing. We're consolidating our position in developed markets, low risk markets with high potential for growth for developing infrastructures, and we're continuing to change and transform our company with the aim of optimizing our operating and financial structure to become more efficient and more profitable. All in all, ACS is in an excellent competitive position that gives us advantages from a commercial standpoint globally. ACS also has tremendous upside to improve its profits. Thanks to the measures that we've rolled out over the last few years, we have successfully completed our transformation process and reduced our risk, and we also have achieved a solid financial structure thanks to the substantial reduction on net debt in the group over the last few years. I think we are better prepared now to be able to continue to grow and to offer our shareholders an attractive, exciting and above all, profitable project. Our targets for profit and for generation of cash have been achieved in 2015. For this year, 2016, we will continue to work as hard as we can to achieve those profitability targets that we proposed 3 years ago. That's my presentation for you. I'm here ready to take any questions that you may have. Q&A. Thank you very much. Hola. Good morning. Santiago Paulino from Caixabank speaking. I have 3 questions for you. The first one is about working capital in Q4. You have, I think, recovered about EUR 1.3 billion. What's changed in Q4 in ACS to be able to pick up so much and to change around those expectations for finishing the year with a flat trend? The second question is about the EUR 1 billion profit you might expect to achieve in 2016. With those drivers that you have in the company, with Hochtief, I think you're talking about EUR 360 million. That's the top end of the range figure, isn't it, for your forecast? How do you think you are going to actually hit that target of the EUR 1 billion figure? The third question is about the appointment of a CEO. When can we expect that appointment, please? The working capital question. We've seen this more during the third quarter, in spite of the fact that the software we had set up was implemented throughout the year. If you've read the messages, especially messages from Hochtief and CIMIC, which were undergoing transformation, the objective to generate cash and control working capital, that was something that was discussed in all meetings with customers, with investors, and so on. What happened? The process matured throughout the year. The EUR 1.3 billion that we've generated in the last quarter have been spread out very well. Let me tell you about it. We followed this closely. Hochtief saw a reduction of EUR 460 million, Industrial Services, EUR 415 million, Dragados, EUR 360 million, and Environment, EUR 80 million. Then several for the corporation. This comes from the customer account. We've collected better, and we've been able to collect better our receivables because of 2 factors. First, we did the work only customers could pay, and then we've checked the work's pending certification. Our customer account has fallen by EUR 1 billion. Our receivables have fallen in EUR 1 billion. This seems like magic, but unfortunately, it has to be digested when you have a group that works in so many places and with so many people. You have to get 200,000 people to do things. But when criteria fall into line, these things happen. If you remember, we used to say that our objective was to not destroy working capital. That's what we said because we were afraid to go too far. The objective was to improve, and this is what we've really been working for. We're happy with the result, but we're not that surprised because that's what month after month we talked about internally and that we applied in all our companies. Then profit. EUR 1 billion in profit. Well, 2 years ago, we said that we wanted to have EUR 1 billion in profit in 2016, in net profit. We're still undergoing a reorganization. As I already said, let me say this again, in that reorganization process, we've been improving not only operating results, but also working capital. We're going to continue to work this year to achieve this objective. What are we going to do? We're going to continue with the process to improve operating results. That's what we did last year and the year before that. We're going to cut financial expenses, debt and interest on the debt. We will also reduce minority shareholders. That's our strategy. That's our strategic project. We've been doing this this year by acquiring a treasury stock. We bought 6% from a shareholder who sold. With all of these three elements, we will reach EUR 1 billion. Maybe not this year, but certainly the year after that. We're doing this in a responsible manner. I think this is going to be an important year for that. This year is very important to us. We're going to complete this consolidation. That's not easy. In 2012, with most of our activity in Spain, because of the needs you are all aware of, it's not only that contracts weren't awarded in Spain, but the contracts that had already been awarded had to be canceled because the government's priority was to fight public deficit. So we decided to consolidate and integrate Hochtief, which had a company called Leighton in Australia. I think that it's difficult to do more in less time. So this is the process we're involved in. This year is going to be very important, and we'll see when we can materialize many of these objectives. This is linked to the CEO issue. Once we're done with that process, the CEO will run a consolidated group with problems that will already have been resolved, and they have already been resolved. 80% of the problems have already been resolved. We still have to resolve 20%. Good morning. Juan Carlos Caro from Haitong Bank. I have a couple of questions. First, on working capital. We've seen a good performance in 2015. What trend do you expect for 2016? Should we expect cash inflows in similar levels than in 2015, or would that be a flat guidance? Regarding the Urbaser selling process, what is the current status? To what extent, given the favorable trends of net debt in 2015, would the sale of this asset no longer be an objective? Is it still one of the goals of this company? Third question, on financial rating for the ACS Group, what are your expectations? What's the outcome of the discussions, and is that going to happen in the short term? Well, yes. I know this has been reported in the media as well. There are a lot of people who see that this is not a core activity for the ACS Group. If they come along here, and some people talk about the numbers as well. Those people, well, yes, and we tell them we've done the numbers, and the process is now at a stage in which we're talking to these companies involved to see what will happen. This isn't a definite decision that we've made, though. Certainly not. Only if the circumstances are right will we go ahead with this. That was the first question from you. The second one. Working capital. I would say the same as I said before. Let's not go mad about this. We have to make sure that working capital doesn't use up too much cash. Our working capital will be the same this year if we make the same efforts we did before. It's not that it's going up, really, it's the volume. What we're doing is paying suppliers. We're paying suppliers a lower amount, and also, we're actually bringing in more money. We're not changing the volumes. I say more or less we're looking at a flat trend, the same figure for working capital for this year. The rating. Well, the rating is a good thing to have, isn't it? But as the chairman said, the important thing is not to do things different to what we're already doing. The metrics for a credit rating agency, when you don't have 100% of the activities are here. It's not that easy to work it out, the EBITDA, the debt structure. When we have a greater financial integration for the businesses, then yes, that would be easier. Yes, I think this will happen sooner than later, of course. Because we now have more than 70% of Hochtief and Leighton, and this is something that we will get to. But let me say again to you, we don't have any big major bond issuance to do. This will happen naturally, I think. We won't have to do anything to get it. I think everything that we've been talking about this year. This is also important. The most important thing is to consolidate, to complete the project that kicked off in 2012 that you're all familiar with. It's on the right track, as I've told you, and I think we will bring it to completion at the end of the year. Everything else will follow on naturally behind it. Hello. There are a number of questions that have come in across the Internet from HSBC. Someone in Dusseldorf is asking the following question. Given the performance of ACS shares, which have actually performed definitely worse than Hochtief, wouldn't it be better to buy up our own shares here in ACS rather than the Hochtief ones, given the current prices? That's not our project. I have respect for that, but as I said, our project is to have fewer and fewer minority shareholders. Tobias was asking us about the demand or expectations for Industrial Services, given that we've seen a growth in the order book, which has been 5%. There's the recent awards such as the Brazil transmission lines. That's not there, is it? What are the expectations for growth and margins in Industrial Services for 2016? Is the expectation the forecast for growth? Or with the current market and environment, do you think that the growth won't be so significant? We've cut down our turnover by EUR 6.5 billion, mainly because of the renewable energies. We sold renewable energies because it seemed that was the right thing to do. It's a good business. It was a business with a high EBITDA turnover profit. They were projects financed for 20 years, and it's true that we had to cut debt across the board. So we did that, and we did that with renewable energies. But if we look at the figures, we've stood up well as far as industrial activity is concerned. With our backlog, things will continue to look good. I see that oil is sometime linked to industrial activity, but that's not true. Our company, Industrial Services Company, is a company that is at the service of different industrial activities. But it's not linked to oil. We don't have a direct link to oil. Unless you can say that we have a customer in Mexico, Pemex. But we work risk-free as far as extraction is concerned. If Pemex invests more, we'll have more, and if Pemex invests less, we'll have less. We have a strong activity as far as electric lines are concerned, catenaries and other kinds of projects, such as combined cycles. It's a very diversified industrial activity with a large share of maintenance. Once we've suffered that drop in turnover because of the sale of renewable energy assets, once we've overcome that, we will continue down that path. We have a great backlog and a bright future. It's one of the activities that has performed better, in our opinion, during the crisis in these last few years. What Tobias was saying, that the Brazil lines are not in the backlog. That's our customary practice. Projects are not included in the backlog until the first certification is done. That's a good practice because in many international projects, from the time of award until the beginning of construction, a lot of time goes by. In order to avoid distorting the backlog, we don't include projects in the backlog until the first certification. This hasn't happened in Brazil yet, and that's why it's not in the backlog. It's a very conservative backlog. When the chairman was saying we have 16 months, it's a very powerful backlog, very diversified geographically and also per products. We have all kinds of industries, not only oil and gas, but also energy, industrial activity, treatment plants. We have a lot of diversification geographically and product-wise, and that provides stability. When a product has dropped, the other products have taken over. It's a very broad backlog, more than in civil infrastructure. Nicolas Morab asks, "What is the reason for the increase of factoring to EUR 750 million after four years of gradual drops? First of all, we haven't seen an increase in factoring there in this period. We didn't actually declare it in September. Hochtief hadn't made it public then. We have to be careful that we don't actually report public information for listed companies that they haven't done. This was something that was happening in Hochtief until Q3. We have around 500, maybe 400 at most, and it's actually Hochtief Latin, really. Joaquin Fored has sent in a question. He said, "Seeing the improvement in the cash position and recurring position, what is the dividend expectation for 2016? We'll discuss this on March 17th at the board of directors, which decides that. What I can tell you, though, is that it's almost sure that we'll keep the current levels. Martin Vontal? Pretty sure. Martin Vontal from Bank of America, Merrill Lynch asks us what the reduction of financial expenses for 2016 is going to be after the debt reduction and transformation in 2015. Well, this is another question, a little like the question about working capital last year. The target is to continue to bring our debt down and to improve our interest rates there. Two big challenges, though, that we're facing. We have different currencies, and the interest rates haven't always evolved in the same way, dollar, euros, et cetera. They've been in a different position. Also, we're trying to optimize our cash. We have a lot of cash. We have a net figure for debt that is quite small, but gross is high. There are about 600, 700 operating companies all over the world, and we have to make sure that we optimize the actual cash there. This is an exercise that we have to move into, and I do hope that we can get some visible results, and I wouldn't venture to give you a figure at the minute. I'd obviously prefer not to do it. But we're hoping, of course, to improve our financial expenses. Let me just add something on this. This is a very big group. Yes, 500, 600 big companies there. But we actually have almost 1,500 companies. It's a huge group. What we have done has been to make decentralization one of our key assets, really. So if every company had EUR 1 million, well, we'd already have EUR 2 billion out there, wouldn't we? So what I'm trying to say is that we know that there is a lot of work for us still to be done there, but we have to do it. As I said before, remaining faithful to our own culture, and I do think that there's a lot of upside there in our P&L account. It's tricky to say that. People don't actually know that we have 1,500 companies out there and all of these different joint ventures. But that's the reality. That's the way things are. We are keeping really strict control on all of this. But what we do emphasize, though, is that independence of these companies, autonomy is one of our strengths, and we will improve on working capital, but it won't be tomorrow. It might take a little longer than that. As I said earlier, what is our upside? What is our strength? Our business, we're very familiar with our business. We want to also implement the enhancements in our operating business, both in Hochtief and CIMIC. We know how to do that. We have the know-how, and then we want to make that improvement in financial expenses. We have a lot of them over there, and the minorities as well. All of this, we will do this as soon as possible. But in any event, as I said earlier, this is going to be an important year. There's a last question from Martin as well. The others are repeat other things we've heard before, so I won't give them. But what is the expected performance in the Spanish market in construction Industrial Services? Are you expecting growth in 2016? I think that in Spain, in construction, there have been very large declines over the past few years, but I think that now the activity we had last year can be maintained. But it's a more modest level of activity. This is not only happening in Spain, it's also happening in other European countries. In Europe, most things have been built. In Spain, there was a lot of building and infrastructure. Our group built the Metro in Madrid, Barcelona, Seville, Bilbao, and we're now proud to be building the New York, London, Hong Kong, Ottawa, Lima, Sydney ones. That know-how has been exported to the rest of the world, and our market is no longer Spain in construction. Spain accounted for 5% of turnover. What we've been able to do is to export that experience, that know-how, our machinery, and especially our people, who are our major asset. In Spain, in construction, it would be good to keep our share. In Industrial Services, we're also growing more outside than in Spain. The markets we operate in are reassuring. We're in a good position. They're safe markets. The major markets are the U.S., Canada, Australia, where we work very comfortably. No further questions through the internet. Well, if there are no further questions, I would like to thank you for your presence here today. We're sorry about the delay.