Earnings Call: Q3 2020

Oct 29, 2020

Good afternoon, everybody, and welcome to Ferrovial's conference call to discuss the financial results for the 1st 9 months of 2020. Just as a reminder, both the results report and presentation are available to you on our website. A couple of highlights on today's results. Today's results are not a set of interim accounts as per IAS 34. 9 months financial information in in our report has been impacted by the COVID 19 outbreak, mainly since the second half of March. At this stage, given the uncertainty about the speed and extent, of the resumption in activity, it is not possible to predict how the health crisis will affect for Raveel's group's 2020 financial statements. Especially in relation to impairment test of assets for value of discontinued activities or provisions for owners' contracts. Viravial will continue to monitor closely trading conditions and further evidence on wider economic impacts from the COVID 19 pandemic. And we'll update the market on these impacts accordingly. I'm joined here today by Ernesto Lopez Motto, our CFO, as well as the CFOs of our business divisions. If you have any questions, you may ask them through the form included in the webcast. Call, we will be reading out your questions and who they are from. With this, I will hand over to Ernesto, who will be leading this conference call. Ernesto, the floor is yours. Well, thanks, begonia, and thank you, everybody, for attending our conference call. Starting with the highlights, for the 1st 9 months, I would like to, go directly to the strong financial position that we achieved at the end of the 1st 9 months. This, net cash ex infrastructure of €1,700,000,000 is higher than the closing figure of 2019. And we have record high liquidity at €7,500,000,000. This has been helped by a very good actually for construction and services. We'll get into that later in the presentation. It's also worth mentioning regarding financial position. The, financing of the private activity bonds of LPGA, a substantial reduction in interest cuts, going forward, and also on the back of, patterns of recovery in the asset that helped, to achieve a good rating and a good, issue in the market. Of course, COVID 19 has been impacting and we'll, review, the main impacts in our accounts and and operations, in toll roads, clearly traffic has been impacted, but the 3rd quarter has been, much better than the second. And as the restrictions ceased, the traffic was, was coming back to the network and and also to our roads. We'll see more of that of that later on. In airports, there's a strong impact on, on traffic. Then this is, affected, of course, by the, travel bans and warranties. We'll get into that later on, what the our airports operations have been doing. Is a streamlining operations and, and getting liquidity ahead of a potential extended, a contraction. In terms of, construction, we have remained with a high production levels, mainly in Poland and the US. And, a bit, margins have improved. The accumulated for the 1st 9 months of the year is, is 1%. We'll also see that, services that is, held for sale has performed, well, in many activities that are that essential. Another topic that has been, one of the priorities of management has been achieving operational efficiencies. Many of those, will, remain for the future and make the, company leaner and, and more efficient bring more value to the different stakeholders. The initiatives more remarkable for the size, are probably the ones taken out by Heathrow and over the English ones of Hampton. Also, the corporation and the rest of the businesses have been, restructuring and, according to the plan that was announced. And one of the main initiatives, of course, is is the the attestation of the support function, something that will come along in the future. All these initiatives that have been launched, as I mentioned, should, remain and bring value in the future. Then, of course, even in this, environment that is quite tough for, any, M and A transaction, we go on with our rotation, of assets. I mean, this part of our strategy, and we reached an agreement to sell, the Portuguese toll road for €171,000,000. Of course, there's no cash yet from that transaction. It's pending authorizations that should come in in due course. Also, we materialized the the sale of a 5% stake in the epidemics for €57,000,000. And, also, we got the closing of the Broad Spectrum transaction that was agreed, with the buyer at the end of, 2019. Okay. So we move on to, the, following this slide, we start directly with the impacts of, of COVID 19. In, the P and L, starting with, airports, as I mentioned, before traffic has been that cumulative in Heathrow for the 1st 9 months is a nearly 69% drop in traffic, but there's been also impact from provisions 103,000,000 for restructuring and streamlining and also £85,000,000 of fixed assets impairment. Everything left on southampton also had a drop in traffic north of, 70%. In toll roads, as I mentioned before, we have to look at the different quarter by quarter or even month by month evolution, we'll get into that. But the community for the, 1st 9 months was, for the 4.5 drop in 407.28 in NTE through the 6 LBA as 16% in the NT35 West. Construction, the impact that we estimate from COVID 19 in the 1st 9 months is 44,000,000 negative effect in the EBIT. And the this is pretty similar to what we had in the 1st 6 months of, of the year and that has been done with a bottom up, and analysis. So here, we're taking into account the cost from its properties, lots of productivity, and, what increased labor costs and so on. But we are not taken into our accounts is any, let's say, revenue from claims that we are processing for for compensation. Okay? This is something that we'll look at into the mitigating measures just on the right, top corner of the slide. And then in in services, we had a 99,000,000 Euro impact, and this has to do, the more with some reduced activity in some in some areas and some additional costs. Of course, If we move into mitigating measures and start with services, I mean, there's been cost reductions and also, the benefit on some temporary flexibility measures provided by the UK and Spanish, and governments. But, clearly, services is looking to, do also more streamlining, as we mentioned, with other business divisions. And construction, as I said, in terms of, compensations, there's some, claims being processed, a launch, or log, and, this will take some, some time, but there should be some success on recovering, at least part of the effect that we, incurred of, the €44,000,000 I mentioned. Then in airports, as I said, the size of the efforts is, is quite important with, Heathrow reductions, maybe north of €300,000,000 and CapEx, reduced by 650 1,000,000 Euros. Also, AES, even with the smaller size, is reducing OpEx by 34 and CapEx by by 23. K. And, well, toll roads as well, and you can see their effort there, even though it has a a a low cost base, even some additional initiatives. And then in the at the corporate level, we have the, initiatives, as I mentioned before, part of that has to be with, digitizing, support functions. And, of course, we, took a provision of €39,000,000,000 for this stream, streamlining that has been recorded in the, in the accounts. So, some of, I mean, many of these mitigating measures should value for the, ongoing future. In terms of, cash flow, the main, effect it probably has been the dividends from the our infrastructure assets, and you have the main numbers there on the slide. The 407159 is our share compared to €222,000,000, last year, and then you have across Heathrow and, another projects. Well, nevertheless, there's 207,000,000 that have come from, our assets, so far. We, don't expect dividends in, in Heathrow in the coming months until or the the situation of the, whatever expires or that we have, regulatory asset ratio that is the net debt to regulated asset base below 87a half percent. Of course, as I mentioned before, we carry on with, the the strategy, I mean, priority, of course, is, safety and equity, a strength of balance sheet for the opportunities that could, come around. And, of course, also a support for the community has played a a role and and and plays a role while the pandemic is is is ongoing, sir, but our our focus remains on creating value for stakeholders developing and operating innovative efficiency. It's a stable infrastructure with high concessional value. So the company is working on on that. And, hopefully, we'll be able to reap the fruits of that effort in the in the year and medium term. Okay. So if we move from that COVID 19 slide, into, the, total section, we can, see the, patterns of traffic that I mentioned before, we can see how the traffic in all the North American assets was seen in in April. And then as the economies reopened, restrictions were lifted, we saw traffic coming back. But, I mean, we have to be realistic. There's a lot of restriction to mobility still, I mean, office, occupancies still low. We'll get into to that later on. And also schools really, the the students don't have to attend in person. Right? So even though they are open is, pretty much online. So, all that affects, overall traffic. And, now we say all through that. As as you know, there's, more cases coming up. There's like a second wave in the, I mean, North America and and Europe, taking the place. Still, you can see that the latest data that we have from October up the 19th, it still saw shows, in many of the roads, a better performance. 1 of the accounting impacts that we have the operating results of toll roads is the impact of, Altima Altema, we have been, I mean, our appeal to the Supreme Court has been rejected, you know, that the grant or change the terms of, the concession from, financial asset into an intangible asset with with traffic So we appeal to the Supreme Court in Spain, but they have rejected that. If that means that, in the numbers, you see, you have the full 9 months of 2020 with Altima accounted for as an intangible assets. And, k, also in the the comparison like for like, we've taken the, impacts in 2019 as if 2019 have been also an intangible asset. So, I mean, there there's no change, of course, in the in cash or net cash position coming from this asset. But you see that, I mean, the the impact is relevant in terms of, of numbers. I mean, in revenues, the intangible asset 1st 9 months, just give €42,000,000 in revenues. Whereas as a financial asset, it would have been €85,000,000. And in terms of EBITDA as an intangible asset is €36,000,000, as a a financial asset, it was it would have been 79,000,000. Okay. So as I said, we, we don't have a net cash effect out of that, but, of course, the, accounting impact in the operating results There's also, impacting to the, an imperment into our holding value of, this participation that I will get into later on when I review the results below the operating section. Okay. So if, we move on to to get into the the detail, we'll see that the from crafty has been, let's say, dampened by, the the good mix of of traffic. Okay. So if we move into the, specific section on the 407, ETR before getting into the managed lanes, we see that, the traffic in the third quarter, even though, I mean, fell vis a vis last year, was clearly much better than the, 2nd quarter. The performance in terms of, revenues He's also helped by, traffic mix, even, not the same degree as, it is in, in Managed Links in, in Texas. And also this has been helped by, toll rates, and being higher than, than last year. K. So, I mean, we have to be aware that the restrictions to mobility in in Toronto have been probably higher than or bigger than in, than in the Dallas Fort Worth area. And, now with, a second wave coming in, we have I what is called a modified stage 2 that, reduces the limits for social gatherings and public events and and so on since October 10th. That's also one of the reasons why we provided the number for October, up to October 19th in the previous, in the previous slides. Okay. So the schools, universities, colleges, and places of worship will remain open, but in person, this is voluntary. In terms of, dividends, but I would like to highlight that in this quarter, there was a 250,000,000 Canadian dollars distribution that adds on to the 312.5 of the of the first quarter. Okay. So, I mean, the board will keep an eye on the, evolution of the asset for a potential, a dividend in the fourth quarter of 2000 and 20. Okay. So if we move into, the managed lane performance in the next slide, Here we, can see, clear help from, commercial and, and heavy traffic. And we see in terms of, transactions, the dropvisavis last year is, is much smaller than what we're looking at at the 407 than T without 28% drop. Be 36 and NT35 was, 16.2%. But look at these assets, I mean, even growing in revenues at the EBITDA, compared to, 2 last years. Right? So still, I mean, there's restrictions, social distancing, but having are showing more resilience, and we'll look in the slides into the different patterns. And remember that heavy have a higher tolls. There's a multiplier that is between 2 times, 2, 5 times, the light vehicles, tolls. Okay. So, in terms of restrictions to, mobility as, we said there was a quick reopening May 15th, but then with the search in cases in in June, I mean, there there were more restrictions, the even in the in the 3rd quarter, there were up to 50% occupancy that has moved, on since the September 21st, to 75% maximum capacity, but, we are seeing communist lives that, occupation in any case has been below 50%. And schools still are not open in in person. Right? I mean, they've opened in in October, not in any of the numbers we've seen for the 1st 9 months, for the 1st for the third quarter. Okay. Financing, I already mentioned of LPGAs, the private activity bonds. Just look at the yield below 3%, and, I mean, this one's Coopers north of 7%. So interest payments will be substantially reduced going, going forward. And the well, all the managed lanes are operating above, lock up levels. Let's see how the performance evolves, through year end. K. If we move to the next slide, when I, also like to see the actual data that how it's shaping, we have all the 4 main, toll roads in North America. And, you can say, I don't know if the colors you, the can see them correctly, you have a a gray or light gray, a kind of dark gray or black and a yellow one. I mean, the yellow one that is the lower single graphs is what we, could see as the trough this year. That was the last week of, of March. And, then you have the, in gray line, light gray is March 1st week where everything was, let's say at full slinders, And then we have the black or or dark one that is the 3rd week of of October. So starting with the 407, I mean, you see that on the way back, I mean, you, to get again the kind of shape, where morning and and evening, you have more, lights And, the this is important to to bear in mind even when you look into different ways of work that we have now, I mean, flexibility probably calls for, still, maybe an extension of the of the of the peak times since people, if they go to work. They go for several hours, not just for an hour or a couple. And that calls for, let's say, some sort of usage of, of those, peaks or or higher usage, slots in the day. If you look into heavies and you can see that pattern that, is very similar in all the roads. I mean, it's it's a very good level compared 2 last years, even in some cases, look at NT 35 West is above last year. If you look in 20, pretty much the same thing. Do have a very high and stable usage of, of the road, maybe a a minimum drop or or or drop, around lunchtime, but you can see that clearly there's a high activity all day and very similar to last year or even or even higher. Right? So even with this, kind of a traffic drop, you see that that that patterns tend to come back to what we've seen in the in the past. Okay. So probably that's enough for that. I mean, we are at a time of a lot of uncertainty. We move to the next topic that is one of your favorite is the the work from home topic. Really, it's all about gathering more data, and we see when, really the economy reopens, and it's not a health issue. How the different patterns, they pan out. But we have some data here that is current data or it just some, poles or studies by different universities trying to put a framework, for you guys to make a decision on this uncertain environment. Right? So If we have different, studies, if we start with the top left, corner, when we talk about observe behavior or pulse or studies, all those paragraphs are related to a US information. Right? Either from polls or actual or from universities. You have a deposit on the different sources. So, I mean, the estimate now is that 60% of the workforce could in theory work, from home. Right? Of course, then you'll need to see how that translates into, what part of the time is actually carried out from home. If they go to the office or not, what employers are, require. Right? The level that was down from home pre COVID 19 was between 5 to to 10%. And during this COVID 19, we, reached kind of the, top or just, over 60% in April. And now the estimate is that it's at 40% in September with restrictions still in in place. Okay. So post COVID 19, there's a lot of studies that we said we like to tread on the actual data before making the models and there's a different, degrees of work from home that could happen. There's a lot of emerging thinking about flexibility and employers wanting to have I mean, presence at the at the office, but flexibility to come and go and maybe some remote work. But, of course, there's a variety depending on the different businesses. But clearly, there is a mix that is not what we're seeing. That what we're seeing now we have the, data on the right for, for Ontario. This is based on the, legit survey. And here, you can see that work from home is pretty much at 40% now. And you have let's say, the average trips falling around 40% vis a vis last last year. Of course, as I mentioned, this is a work from home and a situation where, from a health point of view, you have to use it not to have degree of flexibility, but probably more preemptively. Okay. So, other information that is good to look at to see that not all the cities are the same. And here, we have information from cattle systems back to work barometer. And here you can see that Dallas forward, it's a higher in, the back to work or to the office with 40% occupancy And this is, data from the 30th of September. Right? So it's good to see the difference between cities, like, Dallas Metropolitan area or New York or San Francisco or or even London, if I may, I mean, do you do you have different patterns and also, probably different, share of, public transportation, for sure. Okay. So it's still there's limits this is kind of data that we will keep, looking at. And, of course, there's other very important levers that we need to pay attention to. And the next one is, ecommerce. And here, we have different numbers gathered from, the US. And you can see that e commerce as a percentage of retail sales has been growing steadily pre COVID. I mean, in 2000 and 10, it was less than 7%. And now, in 2019, it was 16%. But in the, pandemic, I mean, the percentage has seg on higher. And in the second quarter, it reached almost 21% of retail sales. And it's expected to to continue to rise, I mean, to 25, 30% easily. I mean, all these are projections from different studies or or sources. Right? So it's not only that the this is growing, but the dynamics are interesting to watch. And as I said, all this kind of data will be going into our modeling and going forward. Right? So there's some pattern changes. Right? Some shopping that was done personally, tended to be off peak and, during weekends, and this now moves to peak periods or in the middle of of the day. Right, and you can, see that relates to the kind of graphs that we are showing in terms of, of heavy traffic, and daily patterns. Also, I mean, the items purchase are transported by larger vehicles. We mentioned about that in, in terms of of tools, and intend to do stops that could bring more condition to, roads outside the the the toll roads within any case, the overall system gets congestions from this stuff and, and go. And then there's, additional trips that are difficult to model, but are are happening. Right? And and you have deliveries to to households that have a no car or mobility impaired. You have additional tips you to fail deliveries or items being returned. And these are not minor. Right? So these are things that will will have to, to check out. Right? And then, of course, there's even more segmentation of the offer online And, you go to, let's say, urgent deliveries that could mean, even more pressure on, on on mobility. Right? So as I said, all these are emerging, data that we need to keep an eye on and probably are been seen more in the Dallas forward area since it was reopening in a more ample mood than than others, that that you can check. Okay. So let's let's move on. If we, keep on with different, levers or impacts that could affect the models going forward, we need into population. We we look into population. Of course, The data I'm showing you and the different projections are pre pandemic. Right? So, of course, there's a the question mark if these areas that have in vibrant will remain so. And, in favor of that would be to try and diversify even more rather than importing things that were not done in the area in the country or, even, let's say, having some sort of more synergies. Right? So These are areas that are diversified for an economic point of view, but also are attracting population growth. And, And you can see in these, surveys, and, well, an actual data that, Toronto and Dallas were in the US and Canada, the the top 2 in terms of growth up to July 2019. They remain in a very high area. Also, Charlotte is is not doing bad in terms of, of ranking. And then then you have projections that the again, they are pre pandemic, but they have different scenarios by the Canadian Ministry of Finance regarding Toronto, and all of them showed very, interesting growth. Okay. So that's another the point that should go into the models, of course, with the current uncertainty is is very difficult. You have to try and and gather data, but it's good for sensitivities to to try and work on this. Next slide, I would like to move on again, as I mentioned before, is the economic divers occasion. And that's key to a strong economy and more interaction. And and then also to see that, the the kind of customers that we that we have, is is quite diversified. I mean, the the last forward managed lanes you have here, the segmentation Of course, the blue ones that are pre COVID, in in total numbers, a different base, probably if, I mean, I have to to check this, but it's probably like a third lower the base of clients that we are considering in terms of users, for the, let's say, 1, and, or burgundy, if I may, this, kind of, graph in any case, show that there's a very good diversification of of customers, and it's important for the different sections and the kind of patterns that they could have that you do then get it a look. And, of course, as I said before, in terms of sectors in the economy, we have presented this in the past. But it's a good reminder of how diversified these areas are. Okay. So, that would be for them turn roads. Let me move into, into airports, Heathrow. And, well, Heathrow, published results, yesterday. I don't know if you, were, on the call, but, indefinitely, very good information provided there. Operational performance, as I mentioned, shows quite a reduction in in passengers, affected by, let's say, quarantines and and travel bans, But, I mean, you can see that, I mean, the Heathrow is, is coveted by, the different players. Right? You have 80% of the airlines are are flying, in terms of how this we are only operating from terminal to terminal 5 or 27% of the outlets are are open. You have new airlines, coming in, and that's important. They already operating. And we are just looking forward to see if there's a couple of task force that looks into testing and the projections from Heathrow that we'll touch on this soon are based on the testing taking place next year and also impact seems being, available. Okay. So, I mean, the global travel task force is working towards this target. In terms of, financing, I guess this is, in key, given there was some confusion with the with a Heathrow node. Heathrow has a very a good liquidity position. I mean, at the end of the 1st 9 months, it had 2 point 4,000,000,000 in cash, but after that, it has raised additional 1,400,000,000 of, bonds in the capital markets. And it has also raised a subordinated debt in a a d ADI finance to €750,000,000 that is available. Right? So you have more than £4,500,000,000 for it. I I said Euro 750. It was £750,000,000, the ADI finance 2 facility. Okay. So all this additional liquidity should provide the comfort in the sense that even with, no revenues at all, something that is very action is not happening. It could go for another 12 months and with the projections that Heathrow mentioned, yesterday, it could go even into 2023. Right? So there's there's a lot of liquidity with some confusion in the, the mention of, capital injection, well, this subordinated layer, the money comes in the, let's say, more senior, part of the financing structure as a as equity, right, is equity life. So that that was the the mentioning. And, clearly, there's appetite in Heathrow for this kind of, of, facility. Okay. So, looking into the, 1st 9 months results, I mean, you can see that the the there was impact of, starting our items like the 103,000,000 provision and the capitalized cost right off of £85,000,000. So all these, as I said, and the provision should mean a leaner and, more efficient Heathrow for the benefit of, of rid of the stakeholders. Right? In terms of, the, the management effort that I I think is, is is huge. I mean, this, to go for more than £300,000,000 of cost savings. And, right now, they have achieved, more than 200. Right? So, it's a good, a good effort and, if they, remain on track for the, remainder of the target. And the different initiatives have taken place here, like pay reductions, using furlough schemes, and the organization has been restructured. Supplier contract have been renegotiated and nonessential costs have been installed. Right? So So Heathrow released on top of all these, things, and, CapEx has been reduced by more than £650,000,000. Okay. So probably for you, it's more interesting. Yeah. And looking ahead based on what Heathrow mentioned yesterday, I mean, they are looking to, 2021 with 37,000,000 passengers. Of course, with all these outlooks, I mean, it's high uncertainties surrounding them. And, also, that's the reason why you you get additional liquidity, right, as as Heathrow did, in October after all, what had been done in the 1st 9 9 months. Right? So, there will be more details in December with the investor report So this kind of, of projection doesn't bring any, sort of, in covenant breach or ratio, bridge. And that's, that's important. Of course, we always have to be, we're paying attention and preparing just in case, there's more delay in in traffic coming back. Right? So the, other point that got a lot of, talks and coverage in the in the press was the that he throw, and reopener. And, well, we should bear in mind that, all the investors that invest in regulated assets in the UK and in particular in the, in in Heathrow, look at a regulation that, basically acknowledges in the regulated asset based, efficiency incurred, CapEx immense CapEx that has been done in consultation with the the all the stakeholders, mainly the the airlines, and it's good for consumers. And that it's recognized and has to get a a fair return. Right? And here with the fair return, the regulation for the the current settlement really provided a low return, with a low perceived risk. But even made the specific common regulation that in extraordinary circumstances, that could be reopened, right, I mean, the CA recognizes there's these are extraordinary circumstances, and then there will have to be discussion on them, any let's say compensation, if it has to be done now or later and the size of it. Right? So Heathrow is, is gonna be some meeting I mean, the strong arguments and and evidence, for taking action now. And, the weight proposed to do it, that that is to, to get regulated asset base back, is a very good way to reconcile of the a holders interest and then imply a a cash outflow for them now. Okay. So as I said, this is based on the regulation that has a risk return framework, that, is the framework that investors trust when investing in the in the in the business. Okay. So, other stuff that will be going on, the coming months of very active from this regard would be the, consultation only not the not only for the reopener for but for the, next regulatory period, the 87 framework. Okay. So a lot of, this to come a lot of work for, for Heathrow and and regulation. Okay. So If we move on to, AES, everything, Glasgow, South Hampton, And here, the, management has also done a very important forward of, restructuring and getting, savings. And they also, drawing down on liquidity, the drawdown £38,000,000 in the first quarter. It means that now the asset has 35,000,000 in cash and equivalents, and net external debt of £726,000,000. And, this was a waiver agreed that subject to compliance with some liquidity and con conditions, sorry, for 2020, but, there's ongoing dialogue now. Between AES, the shareholders, and the lenders to see how they can take the the company going forward if, of course, this would be a kind of, profiling of the, of the, the financing for the coming, let's say, years for the short term until we get the, traffic back. Okay. So, here, we should expect, that it could be quite likely to to do some capital injection, but limited and not, really material in the the whole balance sheet of, of Fabial. But this is something that for commercial reasons we are not discussing now, but, yeah, it could be expected that there could be some some need in the in the coming months, more in the 2021 that this year, of course. Okay. So, Let's move on to the next slide to the construction division where I think it's very good news, the what we have. I mean, production levels have been very high in in margins. We are now at 1 and then community for the 1st 9 months. Of course, this is a lot based on the excellent performance of, in Bluemix that is way above what we, and management, in volume access expected, performing better in terms of execution, winning contracts, generating, cash, and it's not only production, the real estate division is performing great. Right? So this has been the main game game changer in terms of our cash flow, projections. Also, the US keeps executing the world, and, we can say that in general, the, division is kind of, turned the corner and, and and doing better. Right? So we, think that, the EBIT margin above 1% should be achievable. Of course, always, at least on certain times, we have to be careful, but I I think that, we we expect that, and, and, also, in terms of, net cash, we shouldn't be getting cash consumption from construction. Remember that we were expecting to consume 300 or or or more than that this year is not the execution in the US that keeps at good pace. It probably is slightly better than what we thought and also the, performance that has been much better. So I think this is very good news from, from construction, and we can move on to, services is the next, is the next, slide we've, got here. Okay. So we In services, we mentioned before the the impact of some reduced activity and, and additional costs, but clearly some, activities are, essential and, in going forward, probably even more so since some of them reduced environmental impact of human, activities. Right? And, here, probably is worth noting that, waste treatment in Spain has, has performed well. And, also, in the UK facility, management of facility maintenance. If we look into the level of activity, we have a graph, on the top, right right corner, where we can see that in Spain revenues are now at theendofSeptember at the same level as last year. Right? So Let's see. I mean, there's a second. The wave is different from the first one. The, I mean, the company is prepared, but the level of of activities always an uncertain. Of course, the cash generation has been very good. It's through it from the back of, very good working capital management, and, I think that the services management has good job here. The sale of Road expecting was closed. I won't, dwell into that, but Also, all the processes are advancing. There are subsets of the transactions that we mentioned before. They are advancing, of course, in this environment. Pace is not as fast as it would be in a normal situation, but they keep advancing. Okay. So, now if I may, I'll move into the consolidated pin and p and l and below the, operating, level, even though there's, some, comments on the EBITDA that I mentioned before. They are there, in the slide in terms of EBITDA. And then we have the line of, disposals and, and imperments. We we have the, additional improvement in terms of, equity participation of €43,000,000 that I mentioned for Altima. This is not a this is not a cash out. I, have to, remind you of that. And, also, there's no sort of, commitment or, guarantee in this asset. Right? So, take this on a as an accounting effect, note that there's any cash outflow, inspected at all. Okay. So if we move into financial resources below that line, the really the main, impact in the overall financial results comes from the fact that last year, the equity swaps to HD performance share plans, where, I mean, with the share going up, show that the performance. Now this reflects the, let's say, drop in the in the share price is not something that, as I said, it's it's a hedge for a, an economic performance for for managers and and employees. Okay. So In terms of, equity accounted affiliates, here, I would like to comment on, on, Heathrow, the same as, it happened in the past, results in the 1st 6 months of the year. Do you have many impacts that are not cash outflow, but, I mean, they are, significance in terms of of P and L but probably, are a little bit misleading. Right? For instance, we have an impact of 61,000,000 for the fair value of, and derivatives And as I said, this is mainly related to the inflation linked swaps. I mean, these swaps are very important to catch, the regulated asset base and the and the gearing ratios. And, actually, breakeven inflation has been locked in, like, at 3.5%. Let's say, on average, the sobriety, but that could be a very good let's say, benchmark for what's going on, but the inflation realized is is much lower is 1%. Right? So I mean, they are clearly bringing a benefit in terms of, cash to to Heathrow and, protecting also the, the the to wrap ratio. But they have the, mark to market based on on lower real rates. The, of course, this is a very important topic that the freak has to discuss. It's an agenda for the next meeting. Let's hope it can get addressed, at that, at that meeting. Then in terms of, other stuff that goes, in there, you have restructuring provision that will bring benefits and, you have the, from Altima that I mentioned, then you have an effect of discontinued activities. That is a mixture of, a mister Badger Adjustment, the the final impact of, exchange rate differences in broader spectrum and the the, impact of Spain that is positive because it's adding results and it's not depreciating the assets. Okay. So, a lot of noise surrounding these, the numbers. As I said, many of them are not, cash and others will be bringing a benefit it's in the in the future. Okay. So now we should move into the net the the evolution that, as I said, is better than what we expected. And here we have the dividends, from projects, a much better working capital evolution than, in the, in the past. And, of course, we have a shareholder remuneration that is taking place. And in order financing flows, you have the deconsolidation of the net cash position of broader spectrum. You also have the, effects effect of, advanced payments in construction in in dollars that are to pay for expenses going forward. So, this is a normal effect that, has the counterpart of the lower expense. And then then, of course, you have also a small part in, in the tune of, 20,000,000 from minority, shareholders, dividends, relating to Goodymax. Okay. So very good evolution better than we expected higher than last year, December 19. Okay. So let's, start to wrap up before your your questions. And, if we move to the, the summary that I would like to to highlight is, what traffic is impacted by COVID 19, but, I mean, the patterns that we see when it really opens, are for you to, process. But, clearly, when, there were less restrict patterns, were coming back, in a similar shape, as in the past. We'll we'll have to see going forward. In, UK airports, quarantines are really affecting, like, you know, their airports testing is ready to improve, flow when we have the consultation ongoing. So a lot of things on the on the plate, very important with a lot of, liquidity and key throw that is that is key. Construction is clearly performing with, really happy with how it's, it's evolving. And, of course, this is let's say, short term, looking long term, we need to keep DI, let's say, in the forest. I know the trees And, our assets are in very good locations with diversified economies, population is growing, and, e Commerce Mobility trends are interesting to, to watch right now. The long duration is is key and the price and flexibility to pro to, adapt to the different patterns we think is important. So we'll see how these bubbles. And then, of course, it's about, focus. I mean, we keep, looking for opportunities to grow, of course, taking all the different factors into into account. For that, we have less liquidity, and, we are looking for operating efficiencies before the pandemic that have been accelerated and some things can be done out and maybe are more complicated to do on a on a Christian speed. Right? So, for example, at netflow, so all this should bring value in the future. And also last, but not least, very important. I mean, the company has decided to pay 20¢ per share. Of course, that compares to last year. 40¢, plus, and, we keep doing the buyback program, the share buyback program. I mean, the main reason for this, as I mentioned, you have to be strong looking for opportunities to grow, and we think this is This is a good balance. Okay. So thanks a lot for being with us. And of course, now we open the q and a session. Thanks. Thank you, Ernesto. The first set of questions come from Jenny Ping from Citi. LPGA Refinancing has been done. Should we expect a dividend to be paid later this year? And when will we make this decision? Thanks, Regonya. This is Pedro Rosada from Fintra. Thank you, Jenny, for the question. It's true that part of the, LPGA refinancing has been done, last September refinancing, the private activity bond but it still remain the, TIFI alone as part of the current financing instructor. So, we we our aim is to, to end up, this year, distributing the trapped cash that we have been accumulated over the last 5 years, prefinance in contract. But we still consider different options. First is to, to see how the traffic performance evolves, by the year end. And the second option is, we are analyzing, different financing structures that could lead to a refinancing of the TIFI alone. Those, those are good options to end up with, dividend distributions without any type of restrictions, but we need to find out, whether we can, extract equity value from this, refinances be before we take the decision. So the answer is, the goal remains, the same, but we need to wait till any of these two facts, happens. Thank you. Thank you, Pedro. The second question also from Jenny, can you give us a sense of the strategy behind the services sale? Will all assets be sold as one package or will it be broken up in pieces? Okay. I'll take that one. This is, Ernesto speaking. One of the things that we were seeing in in services is that there's, a touch of industrial buyer that, really looks for things that are more fix where synergies can be, let's say extracted. So there's, some players that they could be financial, but have some sort of industrial expertise that could be looking to, certain businesses, like, for instance, waste, treatment, others will be looking for facility management, and it depends on the country. And, I mean, can see, for instance, in the UK, there have been transactions that were complimentary. People were looking to, let's say, complement their portfolios somehow. And, I guess that in, in in sectors that are coming back for a situation, that was with, say, tighter margins that we have with players, that could be interest there. Right? So the the strategy, is more, let's say, piecemeal, but makes makes sense, because it could match more the interest of, of buyers. Right? I mean, right now, what is going on is just some, a smaller pieces, some international stuff, all the smaller parts of Amy that help to that goal. Right? I mean, to get, let's say, out of the questions, some parts that are maybe not suitable for the buyers that are are looking for the the more, the weight or important parts of the businesses. Right? So clearly, it has to be tailored that regard. And when you see most of the transactional going on in the services sector, they, are kind of of that more more specific rather than than than brother. K. Thank you Ernesto. The last question from Jenny refers to Heathrow and the ADI finance to, £750,000,000 loan. It says another layer of loan £750,000,000 can you confirm if this loan needs to be paid down before dividend to shareholders can resume? Thank you. Hi, Jenny. Nice to talk to you, and thank you for calling you for. This is Ignacio Castacon from Ferrogatta, and with respect to your question, the terms and conditions of this, subordinated facility are confidential. Therefore, we cannot disclose to you the whole the whole digit of that debt, that piece of debt. What I would like to remind you is that according to the waiver that, was approved with the Heathrow Finance Creators, back in June of this year, no dividends can be paid by heroes to their latest shareholders, either in the waiver period, or if later, the date on which the RAR is not greater than 87.5%. Thank you, Jenny. Thank you, Matthew. The next question comes from Stephanie Dath from IBC. What are your expectations, for the 4th quarter and for 2021 in terms of ETR 407's traffic? Do you expect a steady movement from here or a potential deterioration like the one seen in Europe? Thanks, Megan. Yeah. This is, Pedro speaking. This is Stephanie for the question. Well, If if if it when it comes to, traffic on the 407 for the next quarter and and next year, we we typically don't give any type of guideline, and more when we are in the in the starting point of the second wave of COVID in in the area. Presumably that could, stop the, the improving somehow, from now to the year end, but we don't know yet which are gonna be the implications. But, taking your second part of the question, we, we, we, we do see is, steady improvements for, for next years, but that will be pretty much dependent on on several things, and that includes, obviously, the restrictions from the from the administrations that could impose and definitely contradictory the the traffic, but if you, take into account, GDP, consensus and the, the vaccine coming sometime in the, in the near future, hopefully, that is, some of the things that, allow us to be more positive, looking at the, at the, at, as well as the differences between the severe, restrictions that we are suffering in, with respect to, the ones in, in the Toronto area or the Dallas area. So, just, summarizing, we, we believe that, without technical consideration that these recessions could take, longer than expected, we see improvements for, for the coming future. Thank you. Thank you, Pedro. The next question from Stephanie what should we expect in terms of tariffs for the 407? Thanks, Agonya. Well, as I mentioned, we are starting the 2nd wave, in, in the area and and the surrounding area of, Toronto and the and the 407, perhaps it's too premature, to understand how will this affect the tariffs, but, probably it's, it's, fair to say that, we don't see any changes during 2020. As you recall, we do stop, our tariff strategy, a seasonal tariff strategy, that we lay out early this year. So we pretty much, believe that we are gonna remain the same for the remainder part of the year. Thank you. Thank you, Pedro. Last question from Stephanie. How has the pandemic impacted the US managed claims ability to pay dividends? Thanks, Bagonia. Well, managed lanes when you talk about managed lanes, the ones that are able to pay dividends during 2020, it says, LPGA and NT On LPG assigned, mentioned in the, in the first, answer, we are considering several options to extract, as we did on NTE, all the CAS trap that we have been accumulating over the last 5 years, that has been the 1st 5 years of operations. And on the NTE, we are expecting to receive a dividend by year end. Course, this, dividend, has been, I mean, this dividend flow that, we are gonna receive from NT is lower than expected due to the traffic impact that we have had during the year. Thank you. Thank you, Pedro. I did miss Jenny's last question, which I will go back to now. Can you elaborate on the mitigating measures the potential of recovery. Thanks, begonia, for sending me the easy ones. Well, we won't provide an an estimate. We've, talked about the impact for commercial reasons, we don't provide estimates here, and we prefer to prefer to be conservative. Right? So we are not recording anything. You have the impacts. We'll take, I guess, something will be recovered because I'm I'm afraid I cannot be more, specific. I'm sorry. Thank you, Ernesto. The next question comes from Boscojeda from UBS. Can you give some color on the percentage of heavy traffic or the percentage of heavy traffic revenues in 407 ETR and managed lanes? Thanks, Regania. Hi, Bosco. Sorry, but, unfortunately, we do not provide, this, breakdown. Thank you very much. Thank you Pedro. The next question or set of questions come from Fernando La Puente from Alantra. What explains the strong shift in cash consumption expectations for con for construction Do you expect the business to be free cash flow breakeven? Thank you, begonia, and, thank you Fernando for the for for the question. Well, the the the this extraordinary, I mean, safety is is basically based on on on on the mix. No? And, and not only in the, in the construction business, that that I will give you more detail, but, but also on the real estate business. I mean, the real estate business has generated €75,000,000 and and due to more notary sales, not notary sales and less investment in in in your plots. In terms of construction, 2 things, I I will mention. I mean, first, better underlying profitability. I mean, we are seeing new contracts with better margin and also the units that we are executing in this moment are also having very good margins in the in the early stages of the of the projects. But also, the working capital. I mean, also incentivized by by by the government and the administration, we we see better collections. Of course, I mean, efficient invoicing, be because we are reducing the time for the for these invoices, but also a very quick settlement of the, of the receivables. On the other hand, and, and as, an a cementsion, the, the gas consumption in in in the US, is better than than our initial expectations, in some contracts with, on those contracts, I mean, with losses, due to the lay on the on the on the on the Prius, particularly in the in the 285, I mean, because of the of the weather conditions, which delays part of this, this consumption, but also, I mean, very good, working, capital management. Thank you. Thank you, Nikki. Second question from Fernando, is there any positive one off in key 34 construction. If not, what explains the jump in performance versus Q2 in terms of EBITDA and margin? Thank you, Patonia, and and Fernando again. Well, the 2 things, I mean, first is that you are not seeing in the in the Q3, same impact of the COVID-nineteen. I mean, that that you saw in the in the Q2. I mean, Q1, no impact Q2. I mean, we saw 44,000,000 and, and in Q3, we haven't seen any any any movement on that. I mean, there's slight differences between between geographies. The second is is, is again, I mean, with the mix, you know, consolidation of the better performance that that we saw in the in the 2nd quarter, including, again, I mean, the the the the real estate business, and and in the, and in the, US contracts, only the the losses coming from the, from the internal fees. I mean, so in general, I mean, very good performance in in in all the, divisions of the of the construction. But, workmanship, and I'm inputting its performance. Thank you, Yaki. And the last question from Fernando, what are your views on the full year dividend for 2020? Is it still to be decided? Can we assume that the €0.2 per share announced corresponds to 50% of the total for the year? Okay. Thanks. This is, this Ernesto. Well, the, decision has been to, the the 2nd dividend that is, like, the last part of the dividend for the year. For it to be 20¢ per share. And as I said, we keep on with the buyback program. So Again, that we get questions and probably later on about what's the rationale. The rationale is is what I mentioned, really. I mean, this is a time to be with a strong balance sheet that's on liquidity, we think that, there could be opportunities, on the way out of this situation that is uncertain in terms of the length and the size of the, of the impacts in the in the different economies. And that we prefer to trade, cautiously. I mean, there's a lot of uncertainty, but we think there could be good opportunities because countries will need to look for productive investments. And, there's a lot of infrastructure needed, and infrastructure has a very good multiplier. So That's the the the reason behind it. There's nothing additional. Thank you, Ernesto. The next question comes from Philippe Belayte from DPI and it refers to Goodymax. Can you explain the reason for 10% EBITDA margin in the third quarter of 2020 versus a 5% in the same quarter of last year. Is this related with provision reversals? Thank you, begonia. I'm Felipe Inaki Garcia from construction again. I think I I've already mentioned, I mean, the the the performance of of booty mix and Annie's it's just, the quality of the of the backlog that that we have in the in the construction. No. I mean, as, as I mentioned, I mean, better margins, and particularly, I mean, better margins in the in the in the units that that we are executing in in in the in this moment. No? But also, in in the real estate business, I mean, just to give you some detail on on on on on Divid margins, last year, it was around the the 17% and now it's 21. I mean, so you have another 4% difference in terms of EBIT or an an EBITDA in the in the real estate business. And particularly, coming back to your question, provision reversal. I mean, we we haven't, reversed, I mean, normal reversal provisions, but net net I mean, we have created more provisions in in the body mix pieces. Thank you. Thank you, Nicky. The next set of questions come from Martin Wather from Bank of America. First question, do you anticipate Heathrow to require a capital increase in 2021 based on its revised traffic forecasts and would federal participate in such case? Thank you, begonia. Hello, Martin. This is Ignacio Castekom from Faroey Faroeyel Airports. I think from, from our perspective, as for real, we see that there is no need for an equity injection in the shortened given the strong liquidity position at, at Hydro. Having said that, no, the scenario can be disregarded, given the extraordinary circumstances, and the uncertainty resulting from the pandemic and its financial consequences is such potential scenario of, an equity injection arose in the future, for would be, for a long term balance between risk and reward an enforceable and robust regulatory framework. Yeah. And just to confirm, that according to the forecast that, Hydro shared with the market yesterday, there is no, no need for, for such liquid injection at Thank you. Thank you, Ignacio. Second question, do you believe you could increase toll price is on the US managed lanes in 2021. Thanks for calling. This is, Pedro speaking from Tintra High Martin. As you know, we typically don't give any guidance, for for toll prices, for next year. But in this particular moment, we need to see, how things, as I said before, evolves, the, depending on the new traffic patterns, depending on how these, new, behavioral changes could, lead for you to end up with, different traffic volumes in different times of the day. Understand which is gonna be the total price in the optimized revenues. But at this point, I cannot share anything anything else. Thank you. Thank you, Pedro. The last question for Martin, what is the remaining cash out for outgo ongoing US construction projects that were provisioned in 2019, initially for more than €300,000,000 we assume this refers to the 1,000,000 provision, which was set in the first quarter of 2019. Hi, Martin. I mean, we're gonna take this, combined between the Jackie and myself, as Lester. So Yeah. We're gonna give you the number that we've used of the provision regarding the remainder of the, of the provision. You also have to take into account that there's some advanced payments that have to be paid back. So, bear with us. I mean, we'll update on this kind of, numbers more at the year end conference call. But, definitely, we've used part of that. And, Jackie, if you can take that that number, please. Yeah. Thank you. Thank you, Ernesto. Yeah. I will I will focus on the on the, balance sheet And out of the 345, I mean, that that were provided in in 2019, 144, were releasing in 2019 74 up to date in in September 2020. So, I mean, pending in terms of balance it, I mean, 127, till the end of this conference. Thank you. Thank you, Nicky. The next question comes from Eric Lulla from JP Morgan. Can you provide an update on the negotiations for 40 seven's Schedule 22. Do you have a sense for what threshold or level of congestion is needed to be reached to avoid a penalty next year, and are there similar schedule 22 type closers for the US managed lanes? Thanks, Regona. This is Pedro again. Rick Wells, the first part of your question, it's true that we are keep on negotiating with the technicians of the administration to, understand the the impact, under the basis that we are interpretation based on the concession contract, as we have mentioned several times, is that, pandemia is a force majeure by the contract. So that should avoid any, application of this congestion payment on the scale of 22 from the, from the contract we, we think that we are working quite well with the, with the administration and trying to find, solutions for, for the, for this year 2020. With respect to the, to the next year, again, it's complicated. Not only, see which is gonna be the the, potentially, the the the the outcome could be similar to the extent that it's very difficult to understand and to define when the pandemia is over. And again, since we believe we are covered by the concession contract that, allow us to say that it's quite difficult to to predict what is gonna happen on 2021, but, as of today, we feel comfortable. And with respect to the last part of your question, or if there's similar, close Officekill 22 in the managed lanes. The answer is, no, we have, no, no, such a type of, closing the match lanes. Thank you. Thank you, Peter. The next question comes from Rushil Piva from MainFirst. Have you seen a slowdown in order intake in the third quarter 2020 or weakness beginnings to show in any of the group's key markets. Thank you. From from construction. Well, yeah, I mean, you see less less works in the in the Q3, 2020, is true that that we we see some some delays in in in in the bidding processes probably the this is, this is, well, a consequence of the of the pandemic and and and how it's impacted in the in the, in the different administrations, in the US, when when you're expecting, I mean, to to win, contracts of of big size in this year. We haven't had one of these, and, and, and this is due to delays. But, but also, we see that in in some markets like like Poland, probably the the market is is getting a bit tougher, and and we are more interested in in, having a, a as mentioned before, profitable backlog and and not be so, worried about creating, I mean, Well, getting, I mean, increasing the, increasing the backlog, I mean, with contracts that we don't see the the profitability because of this defer markets due to the, to the, radiuses of prices and, and, reserve of prices. Thank you. Thank you, Yaki. The next question comes from Nandeep Bamrah from West Capitol. On slide 20 of the presentation, you mentioned Ferrovial has a strong liquidity for investment opportunities with the economy reopening. With Ferrovial now trading at around €20, how should we think about the accretion related to a larger and more meaningful share buyback relative to new investment opportunities. Thanks, Nandeep. This is Ernesto. Well, 2 things to, mention regarding your question. More than, in accretion regarding the the typical earnings per per share. Assessment, we should look at that in terms of, of value and valuation given business plans. Right? And we are not publishing our business plans, and now, I mean, there's a lot of, things moving around, but of course, we have the different, sensitivities. Two things I'm gonna mention to answer your question. Well, the first one is do see that we keep on doing the buyback program. And then the rest assured that new investment opportunities will be benchmark against the the share Okay. So, there's gonna be a a good opportunity is probably going forward. Yeah. And it could very well be, also the share at some point in time, we are looking, as a preference for industrial investment with a benchmark of our own share. Okay. So that that should give you, comfort, I guess. Thank you, Ernesto. There are no further questions. Well, thank you all. Thanks for attending a lot of information. Just hope you stay healthy. Thanks.