Good afternoon, everybody, and welcome to Ferrovial's conference call to discuss the financial results for the first half of 2020. I am joined today by Ernesto López Mozo, Ferrovial CFO, and the CFOs of our business divisions. Just as a reminder, both the results report and the presentation are available to you on our website. If you have any questions, you may ask them through the form included in the webcast. During the Q&A session at the end of this call, we will be reading out your questions and who they are from. With this, I will hand the call over to Ernesto López Mozo, who will be leading this conference call. Ernesto, the floor is yours.
Thank you, Begoña, and welcome everybody. I hope you're all healthy and well. The first half of 2020, the highlights probably should start with the operating impact. Toll roads traffic was quite impacted, especially in April, but have been improving since as restrictions ease and the economy reopens. In airports, there's a strong impact on traffic in Heathrow and AGS. Construction has kept high levels of production, in particular in the U.S. and Poland, but of course, there's been additional costs of producing in this environment. The company has record high liquidity, EUR 7.5 billion, and a net cash position, ex Cintra projects, of more than EUR 1.6 billion. There's been several measures to increase the liquidity, like corporate bond issues, drawing downs of credit facilities, and European commercial paper issuance.
In the main infrastructures, the main projects, there's also strong liquidity, and therefore the first six months of the year closed with strong cash flow, and generated an important part from construction and services. In this environment, also, operational efficiencies are a must, the company has engaged in different initiatives for reducing OpEx and reducing CapEx as well. The streamlining of operations in Heathrow and AGS has been major, even though some of the effects will be more seen in the second part of the year. Clearly, all the initiatives have started and some of them landed already. The program Horizon 24 is advancing according to plan. It's a new operating model that would make us more efficient, more digital, that keeps its pace, as you will see in the numbers. Then, of course, across the group, there's overhead streamlining and saving initiatives.
We'll see more of this later. From an M&A point of view, a couple of divestments here, 5% stake of Budimex was sold for EUR 57 million and Broadspectrum sale closed. That was announced before the year. Most of it closed before the end of June, but there was a smaller part, EUR 12 million, that closed in July and is not included in these numbers. Okay. We move over to the specific impacts of COVID-19. I'll start on the top left corner and move clockwise. From a P&L perspective, in airports, the traffic drops affected, but also we have some extraordinary initiatives that should help to make the business more efficient going forward. There was a GBP 37 million provision at Heathrow, that will help also to have a reduced cost base.
There was also an GBP 85 million fixed asset impairment, here it has to do with projects that will take time to initiate or maybe are not considered to go on in the future. Probably it's more about timing, most of the things. We could get them back in the future from an accounting point of view, but this is a high hurdle. What is more important, they are part of the regulated asset base. From an economic point of view, the fixed asset impairment does not affect us, and the GBP 37 million provision has a clear positive NPV. In AGS, at the same time, there was a EUR 2 million provision. In toll roads, there were traffic drops at NTE of 29%, LBJ 32%, and the 35 West 17%. We'll see that the traffic mix didn't have homogeneous drops, and heavy traffic behaved much better.
In construction, we have additional costs with an impact on EBIT of EUR 44 million. We'll talk about mitigations for this. Right now, you have to take the cost of maybe some delays or additional costs, caused by this pandemic. In services discontinued activity, we had lower industrial activity and services related to transportation or infrastructure maintenance. Because most of the other business were quite resilient, like waste treatment in Spain, for instance. The EBITDA impact in services was EUR 72 million. Moving clockwise, as I mentioned, we have the cash flow impacts. The main one from infrastructure is that there were lower dividends. You can see that most of the dividends were captured in the first quarter.
The remainder of the year, if traffic keeps improving, we should see dividends from the main infrastructure assets because they have ample liquidity, but we'll need to see this kind of operating improvement. In terms of Heathrow, there were no dividends in the quarter, just in the first quarter. Of course, during the waiver period, that Heathrow carried out a preemptive waiver. During the waiver period, there will be no dividends or until you have the regulated asset ratio. That is the ratio of the net to RAB below 87.5%. Per annum, of course, this year, we only are able to reach, but it's a very good mark given that we started most of the initiatives in the second quarter. We'll be able to reap EUR 25 million of savings throughout the company, and additional measures are being addressed.
In toll roads, all the OpEx and CapEx has been reviewed, and throughout the year, we should be able to reduce the billion dollar projects from these captions by EUR 33 million. In airports, there were a lot of initiatives, as I mentioned before. In terms of savings at 100% of Heathrow, OpEx will be reduced by more than GBP 300 million and CapEx by more than GBP 650 million in 2020. Also, AGS, although much smaller, had very important efforts with OpEx being reduced by GBP 27 million and CapEx by GBP 23 million. These are estimates for the whole year, 2020. In construction, the proportional cost reduction is small, even though part of the initiatives in the Horizon 24 affect construction. Directly, we're talking about a small amount because activity has been pretty high, as I mentioned.
The initiative that is also taking place is logging of claims asking for compensation because we have in some contracts force majeure or change in law, and we have not recognized any income or revenue from these claims whatsoever. This could take time and maybe be uncertain. In this quarter, we've reflected the cost, but not the opportunity of recovering them. In services, also more efficiencies that should help also in the divestment process because they can be, let's say, carried out a long time. You can view them as permanent. This GBP 28 million cost reduction is something that is taking place more in the second part of the year, and it does not include any of the lower costs from temporary reduction of employments or furloughs, as you call them in the U.K. or the U.S.
Finally, regarding the strategy, Ferrovial strategy, the group's priorities during the pandemic has been of first and foremost, the safety of the workplace and to protect the health of employees and clients. Second, protect the company's liquidity and its financial position. The third one has been to support the community with a fund to help different people in the countries where we operate affected by COVID-19. This is kind of a slide for the COVID-19 impacts and different initiatives. As I said, all the cost initiatives will be seen more in the second part of the year, given that now you have the initial one-offs that allow you to get you to that position, but the reductions come later on in costs. We move to the section of toll roads. We can see that traffic has been recovering as lockdowns were eased.
If you look at the different graphs, really the last part of June was clearly looking better, and in some cases, like the 35 West on the far right of the slide, getting close to last year's level. There's been a little bit of a setback in Texas. You are all aware that there have been a surge in COVID cases, and that has kind of put a little bit of a halt to the recovery, but still, you are at much better levels than at the trough in April. In the following slides, please don't flip over. We'll see how patterns are recovering, and I think that these are very good signs of the potential for recovery of these roads. On the left, we have the 407 ETR, and here the recovery has been a little bit slower also because probably there were more restrictions in place.
The economy has been slower to reopen. Important news is that throughout this period, we haven't seen really any slow traffic in the alternatives. There has been pretty much free flow throughout the day. Now in July, we are starting to get some data that shows that speeds are starting to slow down in the 401, for instance. Okay, let's flip over to the page where we have the 407. The 407, you have seen the results already, I won't well too much time into the results. You see that revenues dropped by 40%. Of course, you had some higher tariffs from the 1st of February, in general, with the drop of traffic has been kind of partially compensated.
In the 407 with the 401 at free flow, you haven't really seen patterns where you could picture peak traffic in the evening or in the morning, right? Of course, this is something that is as the alternative approaches let's say slower speeds, has more traffic, we should start to see the shape of traffic that we are seeing in Texas and we'll see on the next slide. Very important, if we look into the top right, we have taken the decision to withdraw the appeal to exercise our right of first refusal for 5% stake in the asset that was sold by SNC-Lavalin. This is a decision that has been taken in order to preserve liquidity in the current environment.
We believe that a strong balance sheet and liquidity will provide opportunities for a high-value creation, and there's uncertainty on how long the recovery or putting the health issues behind will take. This has nothing to do and should not be read as us not thinking this is a great investment for value creation. I always say that with the 407, what people miss is with the long duration, the area being so diversified, you end up having even problems in congestion in the 407 just to growth in population and traffic, and that leads you to higher revenues even with higher prices just to keep the quality of the asset, right? The duration, the fact that the area will keep growing and growth will happen along the 407 is still there. We like the asset, we like the investment, but now we have to be tactical.
We have to preserve liquidity, but it shouldn't be read in a different manner. In terms of dividends from the 407, there has been no dividend this quarter. The 407 is monitoring the situation. There's clearly a steady recovery, but probably we'll wait to see this kind of continuous performance and recovery in place before taking any decision on dividends. From a rating or financial position point of view, very solid. Rating agencies have ratified their high investment-grade ratings, and there's enough liquidity to satisfy the obligations in the coming months and into next year. Okay, slow but recovering the shape, the 407. Let's move now into the managed lanes. I'll show you some graphics that tell more than 1,000 words, but still I have to tell you some words about these graphics, right? The first one is that you don't see numbers on the y-axis.
That has been on purpose. This could be commercially sensitive. For instance, in NTE, heavy and lights, the graphs are comparable but are not comparable to LBJ in terms of scale, right? Let's look at the different colors that we have here. The light gray is the color that reflects just before the pandemic arrived, so that was kind of the best performance we saw at the time. You can see some patterns that are clear, the peak in the morning and the afternoon. Look at the heavy traffic in NTE or 35W. You see that it's pretty much at a very high level throughout the day, right? Throughout the daylight.
In the last part of June, the third week of June, you could see that the black line was approaching that kind of level, both in the 35W and NTE. LBJ has more of peaks and troughs, even in heavies. Probably this is natural given that it's a kind of a ring road with one segment being a little bit more commercial. Still, you can see that third week of June, it was clearly approaching the light gray that was the first week of March. When you look into lights, the story here is different, but look how it was approaching in NTE and 35W. There are peaks in the evening or afternoon. Of course, in the morning, with the schools being closed and, let's say, always drivers favoring the use of the road when they get out of work, the PM peak is performing better.
I think that these graphs show that as long as the economy reopens more and more broadly, patterns end up being quite similar. Of course, one of the things that is apparent when you look into heavies or commercials is that e-commerce has grown a lot, and now it's 27%, well, in April, of retail sales in the area, with all the influence not only of delivery logistics but also of reverse logistics or where people return merchandise that they don't like or whatever. That influences the traffic as well. Okay. The area now, we hope, recovers quickly, and all the best in health to people in the area, should recover the, let's say, the strength and diversity that the economy has. Okay. If we move to the next slide, we see more of the numbers, less graphs.
Here you can see that the average revenue per transaction has been coming up, and we think there's room to go still in this, let's say, revenue per transaction. This reflects more moves that happened before the COVID arrived. We'll see a long time and with the different patterns how this evolves, but we still have the sensation that there's still room to go. Of course, in terms of revenues, you can see that the mix of traffic has helped the improvement in revenues. Right? This is great news that they keep increasing share. Also, the share of heavies here is higher than in the 407 in all these three roads. Looking at the financial position of these assets, this financing doesn't have the typical events of default that can accelerate debt.
They have some ratios that you have to meet for dividend distribution, and these are at 1.2 in NTE and LBJ, and in 35 West, 1.3. Of course, the 35 West has to wait a little bit for the first dividend. LBJ has a strong liquidity position accumulated throughout the years and is looking forward to refinancing all or part of the debt this year. Rating agencies have been on that, and the process is following the expected schedule. Regarding the dividends of LBJ and NTE, they will be decided by the boards there and will depend really on operational performance. We wanted to include some information on how diversified the economy of these areas is. We've done this in the past, and also the growth in population.
Well, in the restart of the economy, we think this area is really dynamic, and that's another of the important factors in our roads. Okay. That would be pretty much for the toll road section, and I'm going to move into Heathrow. That again, had the results conference yesterday, and there were talks about different topics that have been on the press. Right? Clearly the operational performance is affected by travel restrictions. One of the most important is probably the quarantine requirements that could be imposed. If you are traveling somewhere and you have to stay put for a fortnight, that really drives out a lot of traffic. Right? It's important to get to models that focus more on testing, as Heathrow was saying yesterday. There's been a lot of efforts to improve all the protection to have technology that makes it safe.
I think that Heathrow and the industry is moving to provide ease of travel. In fact, the projections that were released by Heathrow for the preemptive waiver negotiation are being beaten at this point of time. The fall, I think, will need to ride on a successful summer, and the summer needs probably some reopening or ease of quarantines. In terms of financial performance, you've seen that published. I already discussed the additional exceptional charges. That, as I said, are for a better Heathrow going forward, and the write-offs don't affect economically the write-offs of CapEx. The revenue and the adjusted EBITDA fall, of course, and then we have below operating in financial other items that I will touch on. In general, all these extraordinary items are non-cash, and they are moving in the right direction to save cash from Heathrow.
More on that on a page later. Here you see the impact of the half year, where really a quarter almost had no traffic. Heathrow is preserving liquidity or even drawing down lines that it had. It managed to get a preemptive waiver at Heathrow Finance with the bondholders, and now the interest coverage ratio covenant that goes through December 2020 and tested in June 2021 has been waived. You have other covenants that have been amended, regarding leverage to 95% net debt to RAB in December 2020, and 93.5% in December 2021. As I said before in the introduction, no dividends to be paid until the regulated asset ratio returns to below 87.5%.
A lot of initiatives from Heathrow to make it more efficient and more ideas to come in the future, probably technology will play a part going forward to make Heathrow more easy to use and more efficient. In terms of cost efficiencies, as I said, it will capture more than 300, but in this half year, only was able to reach 100 due to timing. Costs in the quarter are down by 24.6%, here different initiatives were right away capturing, let's say, reductions in costs, like company-wide pay reduction, furlough schemes, simplification, restructuring of the organization, renegotiating contracts with suppliers, and stopping all non-essential costs. Of course, CapEx was also reduced by more than GBP 650 million for 2020. A lot of effort and work by all the Heathrow team.
Congratulations to them on all the incredible effort and speed they are taking on these initiatives. We move forward to the Heathrow looking ahead. As I said, there was a forecast produced that is being met, or let's say even traffic is doing better than this forecast. You always have to have a disclaimer here because of all the uncertainty with quarantines and evolution of the pandemic. Looking at adjusted EBITDA with an important decline versus 2019. Here you have to look more beyond that. We have to remember that Heathrow is a regulated asset. The new regulatory period starts in January 2022. The CAA has been commenting on risk rewards and commissioning studies from third parties before the pandemic that were showing that there was more risk to the business and should be reflected.
All these discussions and business plan for Heathrow to be submitted in the fall will provide the building blocks for the regulation that starts in 2022. Also something we are really aware is that regulation takes into consideration a degree of risk in the business. This pandemic is way beyond. Discussion also on this should take place. Regarding AGS on the following page, we can see that the impact of traffic has been major, and we had only 2.2 million passengers also affected by the collapse of some travel companies like Thomas Cook or low-cost airlines like Flybe. Traffic for AGS to the North Sea has been resilient, and really, management has been doing a great job at trying to respond quickly to backfill Flybe's routes.
A lot of effort also in reducing costs and CapEx, and also negotiating with lenders a preemptive waiver and drawing down facilities to get liquidity. The waiver for June and December was achieved. Of course, you need a minimum liquidity in the fall, in November, I believe, to keep this waiver, but the company is looking at different alternatives that are available to provide that liquidity. Okay. The hard numbers is that in response to COVID, OpEx has been reduced by GBP 27 million, CapEx by GBP 23 million, and you can name the initiatives. Shrinking operations, simpler organization, removing non-essential costs, furloughs. Also, something that Heathrow has not been able to do is a business rates waiver, is the tax you get for usage of buildings, real estate. Something that the Scottish Government has allowed, but Heathrow is not able to get yet.
Hopefully, that could change in the future. CapEx is maintained at minimum levels. Okay. Moving from airports into construction. We can see that there has been a high level of production, and cash flow has been way better than last year. Keeping high production levels also comes with a cost. The COVID-19 has been quantified in this first half as costing additional EUR 44 million. With the lockouts and different shifts of work to keep production pace, and some increase in provision for losses for estimated higher costs in onerous contracts. In the end, without this COVID impact, EBIT would have reached EUR 38 million. It's clearly on the path that we were expecting. Probably Budimex and Webber stand out, especially Budimex is having a great year with a very good cash generation.
This comes from better underlying performance, good collection terms, and also some advanced payments at the beginning of the year. Okay. Construction, even though it doesn't get any margin at this point in time, if COVID is not coming back, it's on good track to improve margins in the second part of the year. Okay. We could move to services now in the next slide. That's discontinued activity. You saw that we closed the transaction with Ventia, for the price agreed. AUD 485 million was the price. It was broken down into two components, two transactions. The bulk of it was sold to Ventia for AUD 465 million, and the last part was a stake in a joint venture where the partner bought the stake and was closed in July, so is therefore not in these numbers.
That was the additional AUD 20 million, that, as I said, are not recorded in June, but have been recorded in July. They are not in these numbers. The cash generation from services stands out. The services management has done a great job of taking advantage of early payments, chasing, shortening of days of collection, and also taking advantage of delays in taxes, especially in the U.K., PAYE and VAT have been delayed, and that has helped to improve the cash performance. Okay. Some of the impacts that I will cover in the next slide that are below the operating level in terms of P&L, probably is better that I address them here. In terms of fair value adjustment, we've taken an adjustment of EUR 44 million in Amey. Really, there's transactions now in the U.K.
You could raise your eyebrows if this is the right time to take this, having seen transactions that have looked at better multiples than what we have considered recently, and in a sector that probably is looking for more budget being allocated and more maintenance and reshaping of infrastructure likely to take place. The sector is awaiting news there. Hopefully, they will get it. The infrastructure is in good need of repair in many areas, and that should help the sector. Probably also that is one of the reasons why we saw transactions, and we should see some consolidation. Nevertheless, we were prudent here, and just in case this takes longer, we provided for EUR 44 million of reduced fair value. In terms of the Broadspectrum divestment, also when you close, you recognize different items like foreign exchange translation that goes through the P&L now, among other things.
This year, we have some historical investments from the former Broadspectrum into New Zealand, Papua New Guinea, other places that was affecting. The main impact is from foreign exchange reserves that, as I said, had their hedges, but with the difference in finance cost between the Australian dollar and the euro, don't really mitigate the impact, right? This is a non-cash item, and it closes that transaction. In terms of results, yes, we've recognized results are increase in fair value in Spain. As I said, apart from this impact in the maintenance of transport infrastructure or services for transport, the rest has been quite resilient, and we carry on. We increase the value because it's not amortizing, and we have that positive result. Okay.
In general, services has weathered well this part in terms of the process that we have there, before we get into the other lines of the P&L. In Ferrovial Services divestment, we are carrying on a smaller divestment with counterparties interested in international and some small parts of Amey, not the bulk of Amey, nor the bulk of Ferrovial Services. Clearly the market is moving, and the market is moving for specific products and services or specific countries. It's really focusing to consolidation, looking ahead for more maintenance coming up. Okay. Enough of services. I move into the consolidated P&L. Here I will also touch on some items regarding Heathrow. Okay, pretty much the financial results are similar to last year.
The main difference is because last year, all the hedges for the employee stock option or sorry, share programs, they really enjoyed the share price going up, right? That was quite a big impact. Now with the share coming down, you have an impact of like EUR 9 million, and the rest probably is more also from the opening of the I-77 for the full year. You have some higher expenses in financial results. The main explanation is what I mentioned, these hedges on the share price. If you move into the impact from the equity accounted affiliates, here you have impacts from some derivatives from Heathrow, and I will explain how they are adding value, but they have a negative impact, right? I will start with the inflation derivatives. The hedges are used to protect equity value.
Remember that all the regulated asset base is linked to inflation. Therefore, it helps to secure dividends and maintain the gearing ratios in relation to the regulated asset base. The alternative is to do nominal bonds because Heathrow is required by the Common Terms Agreement of the financing to have at least 75% fixed, right? Heathrow, that has the alternative of doing a fixed nominal bond or a real rate bond. The real rate is done by swapping a fixed nominal bond into fixed, real, and floating, or variable inflation. Since inflation has been, let's say, locked in at levels, well, locked in, has been close with real rate and nominal rate at levels above 3.5%, the last 10 years have shown an average of three or lower, and now it's at one. The financial expenses of Heathrow are much lower.
It's very good for shareholders that you have this lower cash outflow from the variable RPI or inflation. It is mark-to-market, it is considered speculative, not a hedge, even though this is a part of the IFRIC agenda and has been logged in for consideration because we believe IFRS 9 takes this into account, and it should be considered a hedge, right? Until and if we get hedge treatment, this is speculative, and what happens is that real rates are now lower because rates are much lower. Something that is a clear economic hedge and has benefited with lower cash outflows provides this kind of negative mark-to-market. Of course, enough of this for this presentation. Happy to take calls with you apart from this to see how it works because it has really worked in favor.
The other part that is also something, a consequence of this pandemic, the cross-currency swaps that are having a good and positive mark-to-market, you have to take a hit for what is considered the deterioration of the credit of the counterparties, right? This is something that comes from IFRS 9, and even though it shouldn't have an impact on cash, it's something that you have to take into account. The CDS of many banks have gone up, and therefore, you have to take a hit. Things that are making money for the company and for shareholders need to take this sort of hit from mark-to-market, one of them a little bit artificial, and the other, instead of being considered a hedge, is being marked mark-to-market, and is suffering from the lower rates.
Okay, probably I went too long for that, but I think it's worth it. The other impacts below operations have been discussed pretty much. Okay, I move to the next slide, that is the cash flow generation. Here, when you compare to the closing of December 2019, we see that we have a better position. Here it's a mixture of dividends from projects and divestments helping. Also, you don't have pretty much working capital consumption. That is something to stand out. I mean, every first half of the year, we usually have a working capital consumption. It's negligible this time. That doesn't mean that it's something that shouldn't be reverted in an important part, especially in services, in the second part of the year and next year. Very good performance now.
Shareholder remuneration includes EUR 93 million, roughly of, or EUR 94 million, of cash dividend, and the rest is share buybacks related to that scrip dividend. In other financing flows, the most important component is the deconsolidation of the net debt from Broadspectrum that is close to EUR 80 million. All in all, it ends up with a situation that is a better net cash position than at the end of next year. Okay, if we move into the concluding remarks. Of course, traffic has been impacted by COVID-19, but the signs that we get when there's reopening and there's a sense of safety is that the people are back on the roads. Dallas, Fort Worth, and Toronto are economies that are very well diversified and should lead the growth in their areas, and also where there is high e-commerce presence and mobility needs.
The assets are located in great areas. Other features is not only location, that they have long duration, and they have pricing flexibility, and that allow us to make the most of the different situations and segmentations. Of course, we cannot fool anyone. Uncertainty remains there. We have to preserve liquidity and continue focus on operating efficiencies. We, of course, keep our strategy intact. We have to develop and operate innovative, efficient, and sustainable infrastructure while creating value for our stakeholders. Thanks for bearing with me. Probably took a little bit longer than usual. Now we open the floor for Q&A. Thank you.
The first question comes from Elodie Rall from JPMorgan. Could you provide a monthly breakdown of the U.S. managed lanes traffic, please? Also, how should we think about the prospects of dividends from the U.S. managed lanes?
Thanks, Begoña. Hi, Elodie. Sorry, this is Pedro Losada, Ferrovial CFO, speaking. The monthly breakdown of the U.S. managed lanes traffic, you have that in the report, so it makes probably no sense to go one by one. On your second question related to dividends, we keep on working on getting the dividend flow that we were expecting from early 2020 from our assets in LBJ and NTE. Due to the traffic performance, we need to wait a little bit further to understand whether we are going to receive some of these dividends from these assets, and it's also related to the ability to end up above the lock-up ratio that we've got under the financial contracts. More than that, we cannot provide more guidance at this point.
Thank you , Pedro. The next question, also from Elodie. In the first quarter, you said an equity injection in airports would be unlikely but not ruled out. What are your thoughts now?
Thank you very much, Begoña. Nice to meet you, Elodie. This is Ignacio Castejón from Ferrovial Airports. I think the answer to your question is as we hold to our previous statements, in these uncertain times, we cannot rule out any equity injection in the airports. Having said that, with respect to Heathrow, given their strong cash position, we think that is highly unlikely that that may happen. In the case of AGS, despite their healthy cash position at the end of June, given the new quarantine rules, the waiver terms, and the refinancing coming in 2022, we think that is a possible scenario, having to inject equity. Thank you very much.
Thank you, Ignacio. The next question, also from Elodie. Could you give us an update on the process for the Maryland projects?
Hi, this is Pedro Losada again. As you may all know, we have been pre-qualified with another three consortia. A part of the pre-qualification process, we have signed an NDA, a confidentiality agreement that not allowed us to disclose anything related to the process or to the project. Sorry about that, but at this point, we cannot provide any further details about this project.
Thank you, Pedro. The final question from Elodie. What is the plan for restarting the services disposal process?
Hi. Thanks, Begoña. This is Ernesto speaking. Well, I mentioned that we are already doing some smaller projects in the international part, like Chile, North America. We are also doing some divestments like collections treatment in the U.K., in Amey. That together with the streamlining of operations, it should be pretty much over before we do other parts. It's true that maybe we could change pace at one point in time, for two reasons. There seems to be interest in an area that is quite resilient and probably could have some tailwinds, like all the waste cycle. If that's the case, maybe something could be initiated. At this point in time, as I said, we're doing some smaller ones and simplifying the organization in the different countries, just getting ready for the second wave. We'll keep you posted as things evolve.
Thank you, Ernesto. The next set of questions come from Fernando Lafuente from Alantra. What are your views for the remainder of 2020 in terms of traffic and tariffs for the U.S. managed lanes, and how do tariffs play in the current environment? Is there room to keep on increasing them?
Thank you, Fernando. This is Pedro Losada again. It's probably too early to understand which is the tariff strategy for the next part of 2020 due to the circumstances. We have still some restrictions for mobility, some businesses that has already open, some restaurants with limitations of 50%. Under this scenario, it's complicated to understand whether we could settle at this point any different strategy as the one that we have already in place. We need to see a little bit further how things are evolving. It looks like things are stabilizing a little bit more in terms of going over the pandemic again in the area, but we need to wait and see a little bit more.
Thank you, Pedro. Also from Fernando, what is your view on Ferrovial's dividend to its shareholders? Does it make sense to keep it flat versus 2019 in the current environment? How dependent is it on dividends to be received from the ETR or the managed lanes?
Thanks, Begoña. Well, what we've said at the general shareholders meeting that approved the first tranche of the dividend is that the board will have to analyze at the time. We probably will be analyzing this in the fall, around October, November, with more information. At the moment, there's no comment on the dividend until we reach that point.
Thank you, Ernesto. The next question comes from Marcin Wojtal from Bank of America. Which of Ferrovial's infrastructure assets are the most likely to distribute dividends to the parent company in the second half of 2020? Do you still expect a jumbo dividend from LBJ Managed Lanes in 2020?
Okay. This is Pedro. Hi, Marcin. I will start with answering the second part of your question, which is related to the potential dividend on LBJ. As you know, the idea is to replicate what we did in 2019 with the refinancing of NTE, that allow us to, among other things, distribute after the five years of operation, a jumbo dividend, as you mentioned. It's true that the main thing that we need to take care is the operating performance. That's the number one priority to understand whether we can end up distributing the dividend. We are working with the refinancing of the current financing structure. There is a mix of private activity bonds plus a TIFIA loan. We are working quite well with the rating agencies and with good feedback and working with the documentation.
Probably this is going to be also important, as well as with the operating performance, to understand whether we are going to see that jumbo dividend by the end of this year. As I said, the main feature is to have the delivery of the operating performance and the delivery of the traffic growth that we are expecting.
Thank you, Pedro. Also from Marcin, his last question, are you working on any further asset divestments for the rest of 2020?
Well, thanks, Begoña. This is Ernesto here. It's true that even with this uncertainty, there's a lot of interest for investors in availability projects that we have. It's also true that government rates that are the main payer of this kind of project have been coming down a lot. We are getting reverse inquiries for some of our availability projects, and we could entertain part of that. We'll keep you updated. Apart from that, nothing else.
Thank you, Ernesto. The next question comes from Kenton Moorhead from DWS. What are the potential cash uses instead of investing in the 407 ETR? Is it to sustain other assets? Do you think that the 407 is a safer investment than bidding against competitors on new projects?
Okay. Thanks, Kenton. Ernesto here. Yeah, we think the 407 is a very safe investment. It's also true that when we look into other investments that could have more risk, we take into account the return we get in the downside scenarios, and it has to be quite high. The short answer is, of course, we would be looking to have a risk-return situation more favorable when the situation comes up. As I said, right now it's a mixture of tactics. We think these opportunities are likely to come, and it's good to be more solid. Okay? It has nothing to do with, as you rightly said, the safety and value creation of the 407. That is fantastic.
Thank you, Ernesto. The next question comes from Jose Manuel Arroyo from Santander. It's a question on the 407 ETR. In the second quarter of this year, fee revenues, an otherwise stable revenue stream, declined by 57% year-on-year due to, quote, "A temporary suspension of the late payment charge, enforcement fees for new license plate denial notices, and lease fee charges to help mitigate the economic impact of the pandemic on customers." Have these fee waivers been applied to all types of customers or just to a few categories of them? When should we assume these waivers will cease?
Thank you, Begoña. Hi, Jose Manuel, it's Pedro Losada speaking. The answer is yes, the fee waivers has been applied to all type of customers, not just to a few categories. The second part of the question, I would say that these waivers started when restrictions started. When the state of alarm and the shelter in place started. We consider to end up with this waiver if we see that these restrictions are over. Again, it's a little bit too early, but hopefully, we are close to it. Thank you.
Thank you, Pedro. The next question comes from Bosco Ojeda from UBS. Do you see any scenario where the ETR 407 tariffs could be revised down, even if temporarily?
Hi, Bosco, this is Pedro. Actually, there's no clue what is going to happen with the tariffs. We started the seasonal toll regime on February 1st. We didn't apply the one that we were expecting early in this year on May. At this point, what we could say is that we will remain with the tariffs that we've got. At this point, again, we need to have a little bit more visibility to understand which is going to be the tariff strategy going forward.
Thank you very much, Pedro. The next set of questions come from Stephanie D'Ath from RBC. Why divest 5% of Budimex? Why did you divest, sorry, 5% of Budimex? Would you consider selling any more and dropping below 50%?
Okay. Hi, Stephanie, Ernesto here. Well, this was really opportunistic. We think that the asset still has more value and room to go. There was volume, that is something very rare for 5%, and we took the opportunity to get some liquidity, but we remain very happy with the 50.1%. There's no intention to go below that. As I said, we think it's a fair value, but we think that the company still has room ahead and is performing great. Okay. You have a second question, Stephanie. Please re-clarify what you mean by quick recovery for traffic in slide 16. Well, what we were just saying is that the moment that restrictions reopened, you saw how the patterns quickly approached last year patterns.
That is something that we showed in the slide, where we see the graphs with the different time traffics in our toll roads in Texas. Right? Of course, there is still restrictions like schools and so on, but clearly, the mobility was coming back pretty quickly. Right? If health issues are behind and the economy reopens, the expectation should be for a quick recovery. We were just referring to those graphs where you could see that we were just like last year, let's say in the third week of June. That's the comment referring to.
Thank you, Ernesto. The next question comes from Ruben Gonzalez from Zurich. Excuse me, sorry, we had a bit of a technical problem with the question. I'll move to the next question. The next question comes from Pepa Chapa from Fidentiis. Could you quantify the equity injection for AGS?
Thank you very much, Begoña. Nice to meet you, Pepa. This is Ignacio Castejón from Ferrovial, once again. With respect to an equity injection in AGS, we cannot rule out an equity injection at AGS. It's a possible scenario. Having said that, it's too early to provide any kind of estimate given that the timing and the traffic, and how those two things evolve in the following months, will help us to understand if an equity injection is certain in any case. At that moment in time, after a few months of trading, we'll be able to know if that is necessary.
Thank you, Ignacio. The next question, I will recover it, which is the one we lost before, is from Ruben Gonzalez from Zurich. Are you expecting an increase to the construction provisions on U.S. projects for the remainder of the year?
Thank you, Ruben. This is Iñaki Garcia, CFO for Ferrovial Construction. We review the projects three times in the year. We know that in this moment, we are not increasing the provisions. In this moment, the EUR 345 million that were provided last year, they've been decreased because of the execution of the job sites. In this moment, the provision is EUR 251, and we are not expecting to increase that. On the other side, to decrease due to the execution.
Yes. To put it in other words, Ruben, we would be taking the provision now we were expecting that. We think it's balanced.
Thank you very much, Ernesto. The next question comes from Rushil Patel from MainFirst. Can you provide a little more detail regarding the 407 ETR covenant position? Where does it currently sit in relation to its covenants, and do you anticipate the assets recovering back above its covenants in the near term given the progressively improving traffic trends?
Hi, Rushil. This is Pedro speaking. I think your question, I'm not sure if it's correct because you are referring to the covenant position of the 407, it's below a certain level, which is not the case. Currently, the 407's covenant position is comfort enough. We shouldn't have any problem to keep on going above certain financial covenants, like the lock-up ratios, for example. It's true that if things go worse than expected, we can enter into such a situation, it wouldn't affect other things like dividend distribution. At this stage, we are not in such a position. Again, our ratios are above, comfortably, the 1.35 lock-up ratio.
Thank you, Pedro. Also from Rushil. Can you provide a little more color on the performance of Ferrovial Agroman, which appears to be still struggling somewhat? Was the additional COVID construction costs included within Agroman, and has Agroman now concluded with the previous onerous contracts that caused issues last year?
Thank you, Rushil. Iñaki Garcia again from Ferrovial Construction. Not Ferrovial Agroman any longer. We see the performance as expected now in Ferrovial Construction, because you must take into consideration the COVID impact, that in case of Ferrovial Construction, it's been EUR 35 million out of the EUR 44. Also in the onerous contracts, in the same way that we are not increasing the provision, you must consider that still the internal fees that cannot be provided for are impacting also there. At this time of the year, till June, you have another EUR 20 million in these onerous contracts in the U.S. Your second question was about if the provisions have finished in this construction in the U.S. Yes, for sure. This is what was commented previously, and the provision now is being reduced, just because of the execution. Also with the COVID impact, the provision has been reduced.
As Iñaki said, we are not expecting any further provisions, but of course, circumstances can change. You can have new waves of COVID with additional costs, and there's still some way to go to execute. We think we have a good balance here, but there's a lot of uncertainty. Iñaki is absolutely right. I agree, we don't expect, but we have to have the disclaimer that the COVID impact could keep going and affect additional costs. Hopefully not.
Thank you, Iñaki and Ernesto. The next question comes from Daniel Gandoy from JB Capital. EUR 10 million of working capital outflow in the first half. What can we expect in terms of working capital for the second half of the year? Is the current performance sustainable?
Okay. Hi, Danny. The working capital is something where we usually don't provide guidance, but give some ideas of what could move it, right? Some of the things that move in favor of working capital is when we have big projects being closed, financial close, and you get an advance payment. Like in some countries at the end of the year, you get advance payments, like it happens in Poland, right? If you remember, usually the second part of the year from a seasonal point of view is better in working capital in countries like, let's say, Poland. It's also true that we're not expecting any big financial close this year that could help in construction. In services, some of the help from the U.K. authorities will not be there in the second part, right?
You will have to pay back the PAYE that was delayed until July, and the VAT probably will be delayed until March 2021, right? No, I think there's going to be probably worse working capital performance in the second part of the year, but it's not clear the exact number. As always, we'll strive to close things that will have advanced payments, and we'll try to see how to handle that. I'm sorry, Danny, I cannot provide more color. Of course, this first semester has been exceptional, and some has to give back, but maybe other levers come up. We'll have to see.
Thank you, Ernesto. The next set of questions come from Nabil Ahmed from Barclays. First question, please, can you provide a sense of the Texas managed lanes average tariff in the second quarter, excluding the impact of light vehicle versus heavy vehicle performance?
Thank you. Thanks, Begoña. Hi, Nabil. Pedro Losada speaking. We exclude the mix of light and heavy vehicles. What we could say is that there's no tariff increases during Q2. We have seen some slight increases during the first half of the year. That explains part of the average tariff. If you are looking just only to the Q2, the rest of the increase of the average tariff comes from the mix of light vehicles and heavy vehicles with more increase on the second ones. Thank you.
Thank you, Pedro. Also from Nabil, on the NTE 35W , EBITDA was up despite traffic headwind. Could you please explain?
Sure, Begoña. Yeah, as I said, it is also related with the former question. NTE 35W , as Ernesto has shown in the presentation, has evolved quite well, better than the other Texas managed lanes, and among other things is related of this mix of heavy vehicles and light vehicles. The assets were the weight of the heaviest has grown more, has been precisely on the 35 West, and probably that is the way to explain how this EBITDA has suffered a little bit less. Thank you.
Thank you, Pedro. Also from Nabil, could you please remind us how Heathrow Retail is operated? MAGs, joint ventures? If MAGs, has there been any MAGs waiving during the first half of this year and with COVID?
Thank you very much, Begoña. Hi, Nabil. This is Ignacio Castejón from Ferrovial Airports. With respect to this topic, we have around 38% of outlets open representing in terminals two and five. Those are the terminals right now operating. For these outlets, minimum guarantees are being reintroduced. With respect to terminals three and four, there is a relief in place because those terminals are due to reopen in the following months, depending on traffic, of course. With respect to basically other outlets that the terms and conditions are being renegotiated, those minimum guarantees are being part of the overall ongoing commercial discussions with those retailers. Thank you. Thank you, Begoña.
Thank you, Ignacio. The next question, and last also from Nabil, how do you think about your North American toll rates if working from home still persists? Is it a good or a bad thing between potential lower congestion from light vehicles and expansion of e-commerce? What do you think is the net impact between these two?
Thanks, Nabil. It's a very good question. We are every day analyzing the different good and bad impacts that we will have in this new normal life coming up. It's true that the working from home could have an impact that could be offset by social distancing, people traveling less in public transportation because of that. We can have, as you mentioned, the e-commerce impact that we have seen during this settling at home state. The growth of the e-commerce has been huge. That, as we have mentioned several times in this call, has made a huge wave of the heavy vehicles in our roads. It's difficult to predict nowadays and to give any kind of guidance on which are the different impacts net, but we need to keep on following to understand the new patterns of the users of the highways.
Thank you, Pedro. Next question comes from Victor Acitores from Societe Generale. On the 407 ETR, the average revenue per trip of 3.3% increase at June 2020 seems low versus the average tariff increase announced in February. What is the reason for that?
Hi, Victor. There's no clear answer on that. We keep on analyzing the different behaviors. Probably there's a mix of different things. There are less white-collar movements during AM hours, commuting as they used to do. Those same users maybe are doing some other stuff, not probably related to leisure, sometimes to shopping, and that could reduce the average length that they are doing. As well as, probably today in this scenario, we are having an impact of less vacations trips that, again, reduce the average length trip. Probably as of today, that is the only response that we can give. Thank you.
Thank you, Pedro. The next question comes from Nicolas Mora from Morgan Stanley. In the 407 ETR, how much of the traffic would you say is driven by commuters and potentially impacted by work from home?
Hi, Nicolas. Sorry, we used to not give this data. Sorry about that.
Thank you, Pedro. From Nicolas. In the 407 ETR with lower traffic, is the risk of Schedule 22 payments rising? What is the risk for 2020 and 2021 in a ballpark figure?
Thanks, Nicolas. There's nothing that has changed since we discussed this in the last results presentations. The Schedule 22 is in the contract. Pandemia is a force majeure event. It's specifically a force majeure event. We have an extraordinary relationship with the authority. We are working in a very collaborative way. The management is in a constant contact with them, having conversation. At this point, it's quite difficult to foresee which is the final resolution of how Schedule 22 will impact. The spirit of the contract is that the 407 may be obliged to certain mechanism that is by contract if do not provide a relief of the congestion of the corridor. Since this traffic and mobility restrictions, obviously that restrictions has put the corridor in a no congestion situation. There's nothing to relieve from the company standpoint.
Schedule 22 shouldn't apply, but again, we need to enter into more discussions and conversations with the authority as the time goes by.
Thank you, Pedro. Last question from Nicolas Mora. On the managed lanes, what is driving the latest tariff hikes in LBJ at midday and weekends?
Well, we do have these base rates in the managed lanes, in the Texas managed lanes. On top of those base rates, we can enter into dynamic mode if traffic goes above certain thresholds. What we have seen, it's also based on the elasticity that high tariffs, as you mentioned, in certain off-peak, and that includes weekends periods, and we are trying to understand that elasticity and the demand to put the most appropriate tariffs. As we have mentioned several times, we are far from the optimized tariff. There's a lot of room in probably not only off-peak and also peak hours. Thank you.
Thank you, Pedro. The next set of questions come from Patrick Creuset from Goldman Sachs. Following the solid first half performance, do you still expect to burn cash in construction, ex-Budimex stake disposal that is, for the full year? If so, what level of cash flow consumption do you anticipate?
Thanks, Patrick. This is Ernesto. I'll take this. Iñaki will also complement my previous one regarding working capital. While we announced that we were expecting to consume more than EUR 300 million in construction this year, that's still the case. We're executing contracts where we took provisions, and we have to give back advanced payments in the U.S., that's the main driver, right? When we're looking into the working capital, not only these things in services need to be unwound, we need to bear in mind that we are executing these contracts. To compensate that, we could have other businesses having the seasonal working capital helping them or maybe closing off some works. The reality is that we still expect this sort of level or even higher to consume in construction. No change in that number.
Thank you, Ernesto. The last question from Patrick. Can you give an update on the I-66 construction on timing and budget?
Thank you, Patrick. Iñaki again. The I-66 is performing on track, with very good production. In this first half, EUR 240 million of execution compared, for example, with this EUR 70 million, I mean, of last year. Also good, that the design has been already finished. 93% of the design is finished, so we know perfectly the limits of the end scale of the project. As of today, around 30% of the work is being done. Performing really well, even above expectations in the construction and in favor, we have had the decline.
Thank you, Iñaki. The next question comes from Ellen Elberfeld from Duff & Phelps. What are your expectations for construction margins in the second half of the year? What variables should we be considering? Cost savings initiatives, additional COVID costs, et cetera? Thank you.
Okay. Well, thanks, Ellen. Actually, I took that when I was commenting the slide on construction. You have taken some additional costs from COVID now, if there's no additional COVID-related measure, and it will depend on the health situation, we should have an improvement in margins in the second half. It's really dependent on these external factors. Construction per se would be getting better margins that we would have reflected in the first half that was affected by COVID.
Thank you, Ernesto. The next question comes from Stéphanie D'Ath from RBC. On slide eight of your presentations, you highlight dividend lock-up ratios for NTE and LBJ of 1.2 and 1.3 debt service coverage ratios. Sorry, 1.3 from the NTE 35W. Where are you currently on those ratios, please, and what frequency do you look at those? Is it on a rolling 12-month basis? Would it be fair to assume the ratio deteriorate comes from the next period?
Thanks, Begoña, and hi, Stephanie. Starting with the NTE ratio, we have enough buffer definitely above the 1.2 lock-up ratio. There's no concern here. Obviously, it will depend on the way traffic is going to evolve during the rest of the year. It's tighter on LBJ, definitely, but it's still above the lock-up ratio. On the 35 West, the 1.3 lock-up ratio, we're still also comfortably above it, but it's less important in this case since we are not going to distribute dividends until the fifth anniversary, which comes in 2023. That is the case for the 35 West. The way it's being calculated, it's on a backwards-basis looking to the last 12 months. Typically, it's being calculated twice a year. I think it's in June and December.
The last part of your question, which is we should assume a deterioration in the ratio in the next period. I would say hopefully the other way around. We are expecting to see traffic recovery across the board, hopefully this will end up in a better ratio situation than the one that we have for the next few months. Just I wanted to mention also, that I mentioned on LBJ Express is tighter the ratio closer to the lockup, also that is one of the reasons why we are rushing up with the refinancing. The current private activity bonds cost of debt are around 7%-7.5%. We believe that there's certain savings around more than 200-250 basis points and less that we can get, definitely that will help the ratio calculations. Thank you.
Thank you, Pedro. The last question for today comes from Charles Maynadier from Kempen. Regarding your comment of future dividends from toll roads being mainly linked to the operational performance, could you give more color on what operational performance you're looking for and what level of traffic recovery is needed in the second half in your view?
Thanks, Charles. Ernesto here. We don't provide a specific guidance here. The better the operational performance, the more value, the better it is. Of course, the last pattern we were seeing at the end of June was enough for this kind of dividend distribution. We will look at more things and hopefully look to a better performance. That is the key to get more traffic back again as normal.
Thank you, Ernesto. There are no further questions.
Okay. Well, thanks a lot, everybody. Thanks for bearing with us. Please stay healthy and let's put all this pandemic behind as soon as possible. Thank you. Take care.