Earnings Call: Q1 2020

May 7, 2020

Good afternoon, everybody, and welcome to Ferrovya's webcast to discuss our first quarter 2020 financial results. We hope you and your families are all safe and well in these troubled times. Just as a reminder, both the results report and presentation are available to you in our site. Today's results are not a set of interim accounts as per IAS 34. We'd like to highlight that first quarter financial information included in our report has been impacted by the COVID 19 outbreak, mainly during the second half of March. However, at this stage, given the uncertainty about the speed and extent of the resumption in activity, it's not possible to predict how the health crisis will affect Peruvian's group's, 2020 financial statements. Especially in relation to impairment tests of assets for value of discontinued activities or provisions for onerous contracts. Ferrovial will continue to monitor closely trading conditions and further evidence on wider economic impacts from COVID 19 pandemic, and we'll update the market on these impacts accordingly. Regarding this webcast, if you have any questions, you may ask them via the form included in the webcast site throughout the presentation. Your questions and who they are from will be read during the Q and A session at the end of the presentation. With this, I'll hand over to Mr. Ernesto Lopez Motto, Ferravial's CFO, who will be leading this conference call. Ernesto, the floor is yours. Thank you, Begonia, and hello to everybody. Well, starting with the first slide, well, page 3, actually, we have the overview of the quarter, in this, unprecedented global health crisis. The operating impact from COVID 19 has really been felt in the second half of March. And the the main impact in toll roads and airports in traffic. In toll roads, the main impact has been on light traffic. And heavy traffic has fallen as well, but has shown resilience. In Airports, the strong impact, as we said, happened in the 2nd part of March in Heathrow and AGS. In construction and services, the impact has been limited somehow and the restricted to Spain for the time being. We closed the quarter with a strong financial position. There's record high liquidity at Ferrogl 5,900,000,000 including close to EUR 300,000,000 of available AllianceX infrastructure projects. The net cash position exxinfra, it's €1,600,000,000, pretty close to the position we had at year end. There is a strong liquidity also in the main infrastructure assets. In terms of COVID 19, specifically, there has been many measures. I mean, the first one has been the health and safety for employees and clients that is a priority. Also, we have contributed to face the current pandemic, providing essential services like maintenance of hospitals, operating ambulances, and also development applications to support potential positive cases and also manufacturing with 3 d printers, breathers and masks, for instance. Also, we created a fund deferrabial together COVID 19 fund to financially contribute to to alleviate the impact of COVID 19. In terms of operational efficiencies, this has been a priority as well, reducing operating expenses and restructuring At Heathrow And AGS, the streamlining on and off operations is very important, although the effects will be seen more in the remainder of the year than in the first quarter. Also, the, announced Horizon 24 plan included a new operating model and the restructuring according to that plan has already started. So if we move to the following slide, we can have, an overview of, toll roads. And the in the consolidated numbers, even though we had that impact in traffic, we posted on a like for like basis, growth in revenues of close to 7% the same as in reported EBITDA. This is due to the higher contribution from the US managed lanes, and despite COVID 19, impacting traffic, in all of them. Heavy traffic though has decreased at a lower rate, half or 2 thirds the rate of decline of the light, traffic. The US now represents 68 percent of revenues and about 80 percent of EBITDA of the consolidated numbers. Also, we have the equity accounted result from the 407 ETR that I will cover in more detail later. I think it's useful to look at the graph, on this slide to see how the evolution, has been, a long time. I mean, the first part that we have in the all the roads 407 through NT35 West is January of February. And here we can see that the start of the year was very solid with, important growth, ahead of, before COVID nineteen. Then we have the effect of March with a decline that basically is affected by the by the second half. Then we have, the traffic of the week from the 28th March through April 3, where we see very important drops in traffic from 76% in the 407, to 61% in 35 West. And what we see is that, with, even some, reopening of the economies, let's say, and we see a slightly better traffic already. So here, we have just an image of the April 25 to May 1, the yellow bars where we can see that, in Dallas forward, we see some recovery of traffic. Of course, as I said, these are unprecedented times, the reopening of the economy has been limited, and we will keep an eye on these developments and update you, accordingly at the quarterly results. Okay. So if we move on to the following slide, we can really have a look at the 407 ETR. I mean, these results have been out for some days. So I won't spend much time here. You see that the, decline in, in revenues much lower. Of course, the decline in traffic, helped by, by tariffs. And, we have also the EBITDA dropping a little bit more with some additional expenses in the in systems and doubtful accounts, but, very limited, really, in absolute amount. When we look into the liquidity position, probably is the, best, picture of how solid the asset is. Right? I mean, you are not looking at the typical financial default ratios of any financing. You have dividend lock operations. At 1:35. And the liquidity position of 1.5 is well, above the debt service for the for the year that is close to Far100,000,000 Canadian dollars. So very solid And also when we look at the economy of the, of the region, I think this is important. It's, quite, well diversified, right? So when we see a reopening, we should see the different sectors ferry probably in a different speed, but having that diversified economy is something that that helps. In terms of dividends, do you know from time ago that, there was a a a dividend pay at the start of the year, regarding the first quarter of 2020. And now for the second quarter or others coming forward in the year, the board of the 407, I mean, we monitor the the situation, the current pandemic, and how, the economy, and traffic is is evolving. So here, we will keep, as I said, a close monitoring of the of the conditions. If we move to the following slide, where we have the managed lanes, clearly on the, top left, corner, we have the performance in terms of, EBITDA, and we can see the important growth of, 35 West. 35 West is clearly a corridor that involves, heavy traffic and, and logistics traffic. And this, part of, all the distribution network on the Dallas Fargo Right? So you can see, that performance despite the default in traffic in the, second half of March. So heavy traffic has a higher share naturally with this, better performance and the the, growth in share of revenues of the heavy traffic ranges from, an increase of 20% to an increase of 40% along the, different toll roads in this, subset of 3 of 3 toll roads. In terms of, liquidity, position, Again, this, financing that doesn't have the, typical financial covenant for default ratios. You have dividend lockups at one point, too. And the liquidity is also, very high. I mean, with, reserves, having an excess more than four times the, debt service or needs for the, for the year. Okay. So very solid position and also the from an economic point of view, the diversification is quite, broader than what many people that don't know the region could imagine. And, you can see in this, picture, this image, that is, very well spread and mining and oil and gas extraction represents, only 4% in an economy that is more diversified by the by the day. Also in the rest of, of this slide, we can see the tariff, evolution in this first quarter. And also, I mean, the comment regarding dividends that this will depend on the operational performance, the excess liquidity, and the assets are very solid, but, we cannot provide guidance now for the, dividend for the for the year. If we move on to the following slide where we have, Heathrow Heathrow as well published last week on on Friday. So, this is probably no news to to many of you, but, it's worth, highlighting also at the good start of the of the year, but then we had the drop in the 2nd part of, March. That meant that in the 1st quarter traffic, fell by 18.3%, And then, really, now traffic is extremely, extremely low as you have seen from their presentations a drop has been more than than 90%. I mean, you're having probably some cargo flights that are very important that has in increasing dedicated cargo, very important for vital supply lines. And the Heathrow is working health and safety initiatives to renegotiate, traffic and also, protecting doctor value with the airlines and, and retailers so that they can come back when operations re open. In terms of financial performance, revenue dropped by close to 13% and EBITDA by 2.4%. Here, I would like to to highlight, some, a major one offs, that have been applied really looking for efficiency, but had affected our, and bottom line results this quarter. First, there was a £13,000,000 provision for a transformation, program where basically with a redesign of organization that's breaking up the workforce that provision, took place. And, also, we had a write off of capitalized cost 52,000,000, basically projects that won't be renegotiated, some projects that were related with, retail outlets and so on that won't happen in the foreseeable future. Okay. So this, provisions are for programs that will make Heathrow more efficient as we can see in the bottom right corner of the slide, we have, the Heathrow response to COVID 19 where operating costs are aimed for a reduction of at least 3rd percent in 2020. But as I said before, this will be seen in the remainder of the year in March, costs were only down 5.4%. So different initiatives are taking place, like shrinking and reassignment of our organization, concentration of operations, in a single runway and 2 terminals. And, well, executive pay have been canceled, recruitment, frozen, and all non essential costs have been removed. Also, CapEx has been addressed. And from a budget, from the investor report of £1,100,000,000, the it has come down to around 500,000,000,000, pounds. Okay. So very important efforts from by Heathrow, the most important figure to look at given the drop in traffic now is the liquidity, that Heathrow has. So it has 3,200,000,000 of cash and committed facilities. That allow for really more than 12 month liquidity horizon. I mean, 12 month liquidity horizon is with no revenues and without all these additional cost initiatives that will help, to go longer if needed. Also something that is very important that is not in this slide, but was covered by Heathrow in their, conference call this week. Is that, also at the Heathrow Finance, the hold co holding company above, Heathrow SP there's liquidity well in excess of the debt service. Right? So, with liquidity north of 200 at the end of March, and now they are probably looking as we speak as, to liquidity close to 400,000,000, in that part of the structure. Where debt service is currently close to 100,000,000 annually. So liquidity has been very well managed by Heathrow and this, provides comfort going forward. The dividends paid by Heathrow at the beginning of the year ahead of COVID 19, in full are, pictured in this slide, and we have 25, percent of that we got. Okay. So we move to the next slide to cover AGS. AGS is a similar story probably started earlier with the collapse of, of Flybe. And, also, we had, last year Thomas Cook, of course, the management at AGS was doing initiative to backfill these, gaps from these, from these airlines, but then, of course, could be then team came came along, and we have the, drop in traffic that we showed there. Of course, now we similar to Heathrow with drops, beyond 90%. The liquidity has also been addressed with a a drawdown of, 38,000,000 of facilities in March, with, a closing cash position of 61,000,000. No short of initiatives as well as, with Heathrow with, OpEx, coming down 20% in the year and, CapEx has 24% shrinking operation, re signed organization, reduction of employees compensation, removal of non essential cars and, discussions with Corbin regarding the reduction in the cost base, and some, employees have been followed and contracts outsource. So, again, a very, important initiatives, here and also looking at the capital structure already talking to the bank syndicate addressing the, potential waivers that could be needed if this situation goes along the year. If we move now to the following slide to get into construction, Here, the, performance has been, ahead of our expectations. In terms of, revenues, ahead with, good weather and good production, mainly in Poland, but also good production in the in the US. This has also helped with a good, working capital management, a better activity, cash flow than what we expected and compared to last year as well. And probably other, first quarters that we have seen, in in our recent history. Okay. So, while in the first quarter of 2019, there was a, an activity cash flow consumption, a drain of cash, in the first quarter this year, we have seen a positive activity cash flow of, €47,000,000. Really in terms of COVID 19 impact in the first quarter, we saw some impact in in Spain with some, work stoppage. So that decreased a little bit of execution in in Spain and some higher costs from health and safety. Also because, I mean, even though there was some stoppage, some activity needed to, be carried on, in some of the of this works. Okay. But apart from this effect, in the rest was not, apparent yet. In general, what we are seeing in the different, countries, probably Spain is the exception. But in countries like Poland, in countries like Poland, the US, the UK, Australia, there's an interest from the authorities for this, essential sector to, be active and, and ready and really, operating and looking for the, a potential rebound of, further activity once the economy gets out of the COVID 19 restrictions. So In general, public clients have been helpful with, liquidity in terms of days of, of collection that has helped. And as I said, Barry, Spain, in general, we see, really that this sector, is a high priority for in many countries. Okay. So, in terms of the, of the figures, the, EBIT margin is as we, as expected this part of the year pre COVID, but of course, I mean, with, uncertainty of COVID 19 going forward, we will have to watch the evolution and and keep you posted. So I better start, to the year, but, we'll have to see how COVID nine in in parts, in the coming, months. Okay. So we move to the next slide, in services. Well, the probably the first, news that you may have seen is that in terms of the pending authorizations, the Australian competition commission gave the green light, we are only pending in terms of, authorizations, the fair, the foreign investment, review board, approval, and there's really nothing else. This is the the, let's say, the only part pending for, for closing. And really, the rest is kind of, in the back, burner. I mean, ready to start with the, the economies, reopen, but, of course, we'll have to see how, embedders that were looking at different subsets of our portfolio before COVID 19 started, how they come, they come back if they need to see how they trade, So, I mean, in terms of, valuation, as Bagonia was saying at the beginning of the, of the presentation, really, we haven't made, projects as how the market could look at projections of this business going in going forward. I mean, this is something that, we probably have to see trade, services provides, a lot of, essential services that will need to, regain their full speed when this, pandemic is, is over, maybe other services won't be that that active. So maybe we'll have to see it trading. We have taken the view that we shouldn't be adding value just out of prudents. So, we have, really taken the, needless of Amy and for our services international as a reduction in their, book value. So probably the best thing for me to, at this point, this time is to tell you that our book value for Spain, Amy, and international is below 1,200,000,000. It could be roughly be roughly split around 800,000,000 for Spain, 200 for Amy. Well, a little bit short from that and international as well. But as I said, this is a reference, we'll have to see, when the things reopen, and definitely the kind of, process with subsets that we were seeing at the beginning of the year is probably what makes more sense, but we'll keep you we'll keep you posted. Also, could use in terms of, activity cash flow, has been, much better. I mean, usually there's a, a drainage of, of cash in the first quarter as with construction. This year, we saw much better performance than last year. A €33,000,000 drain versus 113. So, it's trading in good, in good shape. I mean, the impact really from COVID-nineteen has been more related to, to Spain, probably Spain's EBITDA that we are not reporting here has been affected, like, in 7,000,000,000, but we'll have to see how the remainder of the of the year trades. As I said, fact that we provide some essential services keeps activity going on, but we will have to see how, things trade going forward. Okay. So we can now probably move to the consolidated P and L on the next slide to basically point out to some, figures that we haven't that we haven't discussed. So, regarding the APDA number, in this quarter, we took a €39,000,000 provision. We will talk a little bit more about this in following slides. And the this is the, what's needed to achieve the running rate of savings of 50,000,000 per year from 2021. In terms of financial, results, the financial result is very similar to to last year, even though in terms of infrastructure projects we have is slightly, less given that we have the consolidation And the we have, and the other hand, the lower refinancing costs from NT in general, but we have higher expenses, from I 77 that was not fully open last year, regarding the comparison. And this for the from the infrastructure projects, the main impact here is the, the from a plus 3, revenue of 3 in 2019 to, an expense of 2 this year is the switch in the equity swap hedges for pro form a shares because there has been a drop, as you know, from the beginning of the year in the share price. Okay. So, moving down to the equity accounted affiliates, you have the performance from the, 407 ETR similar. Some grows to, the first quarter 2019. This is thanks to lower financial expenses due to lower inflation. And then you have Heathrow that has an important string. And here, you have the effect of the provisions, for a restructuring and, write offs of CapEx that, by the way, I should have mentioned that the write off of CapEx is not that write off of the regulated asset base, so it keeps earning that return. It's just a noncash expense. And also, we have the impact, that is also, accounting non non cash from the decision by the government to, keep the corporate tax rate at 19th instead of, allowing the, previously enacted 17% rate. This affects because, you know, that many of the big infrastructure companies in the UK have a deferred tax liability from the moment that the industrial building allowance was, was a scratch. Right? So amortization of infrastructure investment doesn't get a tax shield in the in the UK. So, that deferred tax liability increases with a higher tax rate, but as I said, it's a non cash item. It affects the account. That's the main driver of the change of, equity accounted affiliates. It also affected, but in a lesser degree, to AGS. And then as we mentioned, in the discontinued operations, instead of recording, a net income allowed by 5 without amortizing the assets in the in the business. We basically have decided to take this fair value, adjustments, and we'll keep an eye on the evolution of the business post, commit. I already gave you the kind of, our our book value numbers. So, we reached a consolidated net Incompleted the compatibility of minus 100 and and, 11, where you see that, basically, there was, a lot of one offs that that affected this net income, otherwise, that we would have been pretty much flat. Okay. So, after this, slide, we can move on to the next one being the net cash, evolution. And here, you can see the main components, dividends from projects of 129 in the first quarter, then we have the BD and the working capital, evolution that's placed better than other years. And, I would like to highlight, that you see in shareholder remuneration, we're talking about the share buy buyback that you some of you probably noticed that we announced with the start earlier, this year. We have, bought 1,000,000 in shares for buyback part of the program. K. So the I think that the quarter has been much better than that expected with an ended variation. That means reduction of net debt or cash increase, really, of €14,000,000 versus a decline of 3 €6000000000 last year. So much, much better performance. Okay. So if we move to the next slide, we talk here about the, new operating model that was announced in Horizon, 24. It's more agile, innovative and and efficient. And the we have taken the provision for the streamlining of operations of €39,000,000, we still expect to capture savings this year out of this initiative of, roughly 20 €1,000,000, and that, will enable us to capture a running rate of fee the €1,000,000 annual savings from 2021. Okay. So we move to the, closing the slide before getting into the Q And A. Well, the the the board, I mean, looking at the, better than budget cash flow at the solid financial position has approved, the first scrip, dividend. No point 312, would be paid to shareholders that ask the company, for the payment in cash of the dividend. And for the ones that, go for shares, 71 rights will be required for annual share. Of course. And, this is something, that's very important. The second script dividend will have to be decided, upon the COVID 19 evolution and the business performance. So, the company will keep monitoring this, in this, unprecedented and challenging times. Okay. So thank you for bearing, with me, we moved for now to the Q And A session. And, okay. Put myself on mute. So if we start with the Q and A session, the first question comes from Tom Furman from Hermes. I note that the I 635 is seeing construction works commencing in 2022. This appears to be a big feeder road to the LPG managed lane. How do you expect this to impact traffic volumes and growth for the 5 years of those works? Okay. Well, we mentioned this project before. I mean, while the works Iran, this will, impact negatively, traffic because basically it will, add to congestion at the end of that, road. Once they open, we believe that's a lot of value because that was a clogging part that prevented some people from getting into the LBJ just because they would end up in a in a traffic jam. So if you smooth that connection, it should, add growth going forward. We don't have specific numbers to share. And, let's meet the current, uncertainty, but we'll we'll be providing updates as, as we get live data. Thank you, Ernesto. The second question comes from Gabriel Meggas from Gestinver. Given your best estimate of the pace of reopening of economies, when do you think the ETR and the managed lanes would recover pre COVID traffic levels? Well, thanks for the thanks for the question. I mean, really, we don't know what will be the pace of, of reopening, and the pace of, of traffic, recovery. Okay. So, we you will have to bear with us here, and we will update as we get more information, but, it's very difficult to provide an estimate. Now it's still, Toronto is on an emergency, state situation, let's say, with people remaining at home, and we are starting to see some slight reopening of the economy in in Texas. So it's it's very early to tell, but, as soon as we get better visibility. We'll, we'll see how we can assess that. But right now it's uncertain. Thank you, Ernesto. The next set of questions come from Stephanie Dath from RBC. First question, how do you expect managed lanes to perform in a COVID 19 environment where congestion is very low? Do you expect any revenue at all? Well, thanks, big on you and it's Tiffany. Well, the only data that we have is the is the current one, and the we are seeing, traffic, of course, with an important, drop that, in the worst moments has been around the 70% than 60%, maybe 50 something, percent, and 35 was even performing better. So, yeah, that's, that's bringing revenues is still the roads are, connected. And even though there's, low congestion, connection to the different logistics center and so on is bringing, traffic. That is data that we keep analyzing we cannot provide an update now, except for what we showed in the, in in in the slides that is the the fresher that that we that we have. Okay. So, as I said, probably the good connection is helping the performance. It's early early to tell. When we get more information, we'll we'll see. Thank you, Ernesto. Also from Stephanie, what is the ability of the 407 ETR and the US managed lanes to pay dividends to Ferrovial and deferred CapEx. Well, actually, there's, in the in the managed lease, there's not that much, CapEx. There was some, CapEx going on, around the NTE 12 that is, likely to be postponed because it's more related to to traffic, conditions. And there's plenty of, of, liquidity. Right? So really, the decision will be based on the operating, performance. And will be decided, probably 1st submit a a year and then at the end of the of the year. The liquidity and the some recovery of traffic should allow for some dividends, but it's it's early to tell. I cannot give you right now any more, detail than the, level of liquidity that the that the assets have. Thank you, Ernesto. Also from Stephanie, apologies. Also from Stephanie and regarding Heathrow, what is the ability to take a share from London Gatwick in the current situation and can you please give us an update on runway 3? Well, taking share from London, Godway, when there's no traffic, really doesn't apply. I mean, we will have to see when the, airline industry starts to, do some, initiatives, like the, let's say, the sanitary passport, health passport, other initiatives that could allow traffic will will have to see, and then right now, there's no traffic at any of the of the airports. True that the Heathrow usually brings synergies to airlines for, connections and also because it's a preferred location for travel. So, maybe that will impact, but, we don't have the that that north information now to to, give any estimate. Thank you, Ernesto. And finally, from Stephanie, can you please update on the services divestment and potential increase in 407 ETR stake in the current environment, which it seems less favorable to pursue. Okay. Well, regarding the services divestment, I already mentioned that we were working on the different subsets, before the COVID 19 situation, those processes are now on on hold. And, definitely, we will have to see when the economy reopens, how, these, different businesses, trade. So it's to, is too early. The only thing I can see how it it was looking before, before that started. I have already mentioned also the book values that we have. In terms of the 407 ETR stake, yes, there's a, a hearing of, that, right, of first refusal, I would say judgment there's a hearing, probably, maybe in in June, July, a potential decision could take a while. The message with the 407 ETR is that it's a a very long asset where we still see value. Okay. So, we'll, make decisions later on. But the message now without any further information on how, patterns could change is that it's an asset that is needed in a in an area that keeps growing and this long term asset. So, it has, still a lot of potential. But early to discuss, evaluations. Thank you, Ernesto. The following question comes from Victor Afitores from Societe Generale at February, the guidance for operating cash flow of the company in construction for 2020 was of a €300,000,000 cash consumption. Is this guidance maintained in the current situation? Well, we started the year, better, but now there's a lot of, of uncertain uncertainty, regarding, if production will be able to hold at current levels or in some countries you will be asked to, to stop. I mean, in terms of production, production is holding well in Poland, US, Australia, with some delays in, in, maybe Spain, maybe some Latin American countries that weigh less. So here, really, it will depend on on that. We, have to we will have to update as, you go, as we go along, because of the of the uncertainty. So far, we started better, but, as I said, we cannot provide any guidance on the current and the current environment. We'll keep updating. Thank you, Ernesto. The next set of questions comes from Nabil Ahmed from Barclays. First question on 407 ETR, what is the 407 ETR traffic threshold that triggers a congestion payment? Has traffic fallen below that level during April, and it would be useful to remind, the market how this mechanism works. Okay. So thanks, for the question. I mean, the contract for the 407 for KPIs has a force majeure clause that considers a pandemic a force majeure. And when there's force manager, really, KPIs, I would say don't apply. Really, this is something that has not been, tested before, but clearly the the contract says that. And, also, this, as you, rightly say, is, it's a congestion relief payment. Right? So it's a it's a payment if, congested in the in the alternative routes, is not, is not I mean, there's a and the state, I think it's called the state of, of emergency. People have been asked to to stay home. So there's basically no traffic, no congestion. Right? So the sum of all that is that, our interpretation is that it doesn't it doesn't apply. Right? So, it's not worth discussing the, mechanism in this, in in this presentation. We have different presentations when you can see how it works. The reason for this is that we don't consider it, it applies, in this situation. Thank you. The next question on the Texas managed lanes, Thanks for sharing the traffic data at different points in time during April or May. Could you please also comment on pricing and what the lower congestion means for the value for many of the managed lanes. In other words, did you grant rebates to planned pricing to attract any traffic? And could you please share how much commercial traffic was accounting for in revenues for the different assets. Hi. Thanks for the for the questions. I mean, we, are not, this playing our, commercial policy regarding the managed lanes, there's not there hasn't been really much elasticity in the in the current traffic. We will have to assist when the market, reopens, when the economy reopens, how traffic, flows. But, here, really, there has been non major commercial plan so far, in terms of rebates and, and so on. And, well, you were asking also about the different, share of, commercial traffic and the revenues and so on, we are not providing that, information at this, point in time, for commercial sensitive reasons. Thank you. The next question what was the impact, of the, different mix in traffic, for the average price of the first quarter of 2020 of the different assets. Well, this this question is similar to the prior one at to end up getting what kind of weight each segment has because we have provided what the tariff is from heavy and lights, right, we are not providing that, we are sorry at this, at this point in time. Thank you. The next set of questions comes from Martin Wathelet from Bank of America. Do you expect the LPGA managed lane to still pay a large initial dividend in 2020? We are not providing guidance, have their jet, if traffic recovers, normally, not especially just there could still be that possibility. But, we don't provide a specific guidance for the dividend in 2020 for LPG. Thank you, Ernesto. Also, from merchant, if the AGS airports required external financing supports. Would Ferrovial be ready to inject capital into these assets? Okay. Thanks for the question. We don't expect to inject capital our, airports business affected by COVID because we we see this as something, temporary. It cannot be ruled out, but we don't, we don't, expected. Thank you. And finally for Martin, Do you still expect the disposal of broad spectrum to be closed during 2020? Would there be any adjustments to the previously communicated price Hey, thanks. Yeah. We expect to to close it. And, as I said, we're only depending the, a fair, approval. No, I mean, there there there could be some some minor, adjustments to the equity component. And then, of course, we would be, let's say, deconsolidating the net cash or net debt, position of spectrum. At this moment, the net there's a net cash position, around 7 1,000,000. So we would deconsolidate that. And, that would be, let's say, like, cash out from the perimeter that you're seeing now in the P and T, but we will get the, substantially the, the equity, of, 485,000,000 Australian dollars. If I recall correctly, that's the That's the expectation. Thank you, Ernesto. The next question comes from Daniel Gandoy from JB Capital Markets. The €26,000,000 working capital outflow in the first quarter is very low and it doesn't include any seasonality. And like previous years, Was it been the driver is to explain the positive performance? Are there any meaningful prepayments or other extraordinary items behind this figure? Should we now expect a meaningful outflow during the 2nd quarter to compensate for the 1st quarter performance? Okay. Thanks for the question. Well, not really what happened is that, in in places like Poland, for instance, really didn't, get, a lot of, advanced payments at the end of 2019. And, it has been producing world, whether it has been good, and days of, payment by clients, days of collection have been short. So So, it it has been a very, a good, performance that, as I said, I mean, it's, partially related on some advanced payments, but most of it is really good days of, collection and good cash, generation, because of good production and and shorter days of collection, generally across, the board. Right? So, here, if that keeps playing because public clients keep pain in shorter days. That would help, of course, if activities slows down with the because of COVID, clients ask to, to stop, performance that could affect, for instance, in in Spain, not in other countries. So The short answer is, no, we don't expect, like, a single drop related to this first quarter. No. I mean, if there's working capital affected, it would be because, places like, Spain, there could be a a drop in, in activity. So far is working, on a normal, production all across the board with Spain some, stoppage in some, in some works. Okay. So we'll keep an eye, but it's not like, a single payment that has to be returned right away. Thank you, Ernesto. Also from Daniel, there's a €48,000,000 negative figure at EBITDA level for others, of which 39,000,000 come from a restructuring provision. What is the driver of the other 9,000,000? Okay. So in the other 9,000,000, we have, a small, components like mobility, some, a negative cost of the lack of, of activity. And the main component is, overheads that were not charged to the services division this year, like, in in the past year. Right? So there has been the main, the main effect on those 9,000,000. Thank you Ernesto. The next question comes from Patricio Garviso from Norbosa. Which event would imply the suspension of the 2nd script dividend? We are not, looking at any particular, event okay. So, it's, just across, across the board, how performance is go in the different, in the different, divisions. We haven't really assigned that to any specific event. It's just prudent, as other companies are saying, I mean, the outlook, is uncertain, could take more time to recover that. And the pro is better to hold to, the cash for many reasons, even for corporate purposes that could be good investments that could come around. Right? So there's no specific, event that has been assigned for for that decision. It's just overall corporate through this. Thank you, Ernesto. The next question comes from Fernando A Fuente from Alantra. Can you give us any Russian regarding the potential evolution of dividends from 407 on the one hand and the managed lanes on the other, just the building block to understand what could be the evolution of these dividends. Well, do you have, different things here? I mean, on one side, the management's have accumulated cash from the outperformance of the past, years and beginning of, of the year. And that's something that will get see that at one point in time, and then the rest will come from the operational performance. In terms of the 407, there's also similar situation. There's a lot of liquidity. It will depend on the, operational performance going, forward. That is what determines really, the dividend, performance on the, medium and longer and long term we are not, more specific on this regard. The only thing that we provide is the ample excess liquidity that they have. That, in time, should, show to, to shareholders, but we won't be providing any specific, timing or or path at this point in time. Thank you, Ernesto. The next question comes from L. D. Ralph from JP Morgan. What is your view on the likelihood for a US infrastructure bill and how it would impact Ferrovial's business? Okay. It's too early to tell about a broad, infrastructure build. I mean, we welcome, all the infrastructure investment and much is needed in the, in the U. S. We are really paying a lot of attention to, projects that, are being discussed by some, departments of trans portation that involves more, private initiative because they want to keep an eye on the public, finances on the, on the balance sheet. Right? So For us, probably, that's where we are paying more attention. We welcome, all, that could be, a broad really of the much needed, infrastructure, overhauling the US. Thank you, Ernesto. The next question comes from Jenny Ping from Citi. On services business, have you decided to only take the fair value provision losses and keep other contributions at 0? Can you tell us what the contribution would have been if you had taken the benefits? Yes. Thanks, Jenny. So instead of taking ahead of €16,000,000, it would have been a profit of €38,000,000. 38. Thank you, Ernesto. The next question comes, from Ellen Elbefeld from Dattenfeld. Heathrow makes up a large percentage of the dividend. If air traffic takes an extended period of time to return to 50 or 75% of 2019 levels, how will Javier think about the dividend it pays to shareholders? Okay. So, if, the question is regarding if the Ferrogial dividend is based on, the dividends from, from Heathrow, No. That would be a small that would be a small, part. And, well, dividends from, Heathrow I mean, until there's a recovery, are not, expected, you're right. So, I mean, it it it should record, we have to remember that this, an an airport that, attracts, airlines when it recovers air traffic recovers, you would also be looking to a new regulatory, period and maybe you can, really look at the the value of recovering at that point in time. So the the main message is that we are not dependent on that. Of course, it it adds, but it's a it's a small percentage and it's not relying on on that. Construction. Thank you, Ernesto. The next question comes from Sonia Valdez from Bloomberg. What explains the construction activity improvements? Are there any particular works that can be highlighted? Well, the main, impact here has been from favorable weather conditions. Mild winter in just in Poland explains, most well, the I 66, for instance, recorded €100,000,000 in production in in revenues, a grand parkway, €42,000,000. Heavy civil works in Weber, €160,000,000. So, in Poland, also, there was heavy civil construction. So I would say it's, the warm weather that has allowed for, a better production. Thank you. Ernesto also from Sonia, Do you see any emerging trends from COVID 19? For example, hospitals or care center projects? Well, everybody's, talking about higher, investment in Infra Prairie within hospitals, but, depending on geography in the, short term, there could be a decrease in in bidding processes due to, public finances, deficit and so on, right? So, in terms of, short term talks, probably in Spain, there's less, talk about projects coming to the, to the market, in terms of, civil works. But, in general, we should, expect, in, in most countries to, important infrastructure or infrastructure to be addressed with any revamping of the of the economy, but it's a little bit early. Thank you, Ernest. The next question comes Louis Samu Sataghi from Cygnus Asset Management. Can the reduction in traffic in the managed lanes bring a forced reduction in tariffs? Okay. Well, in the managed lanes, base, based tariffs, are set, by the, by the operator, they are not related to, to traffic. Right? So, it's not, something that the, traffic per se automatically changes the the algorithm. Now we have the base. Rates, and then, the algorithm works around that, but it's something set by the by the operator, not by traffic. Thank you, Ernesto. The next question comes from Jose Manuel Arroya from Santander, will the 407 ETR forgo the winter tariff scheme this year following the decision to skip the summer tariff scheme? There's no decision yet on that, on that regard. Finally, also from Jose Manuela Royas, Ferrobiad dance on tariffs in the managed lanes, how effective could be could it be lowering rates in the managed lanes to attract volumes would lowering the tariffs be a sensitive, a sensible tactic, or could this hurt the perception of value for money? Well, at this point in time, with low traffic, there hasn't been much as sensitivity, much elasticity to, different, tariffs. Right? So, people are using the the road probably because of how, well, connected it is, and, and, and, the fact that you can travel fast, In terms of, the going forward when the economy recovers, we'll have to assess it at that, at that time, but, right now, there's no data to discuss, to discuss that. For the time being, what we have seen is almost lower elasticity in the current traffic. Thank you, Ernesto. The next question, comes from Robert crimes from Insight. During April or May, have you reduced prices for the Texas managed lanes? There were some, functional reductions, during a a week, we cannot give more, detail, And really, the reductions have been just for medical, support, urgent fees, and that that has been, a more important drop. I mean, for this medical support has been a drop of 50%, for the reservoir, just some punctual stuff that is not worth, mentioning. Thank you, Ernesto. The next question comes from Nicholas Mora from Morgan Stanley. Do you guys see a need to reinject equity into Heathrow in a bear case scenario of language traffic recovery? Thanks, sir, Nicola. We don't see that at the moment. I mean, we I mean, really with this unprecedented situation, I mean, you cannot rule out things, but it's it's not it's not really expected for, many reasons. I mean, first is that there's ample liquidity. And for instance, at the Holdco level, Heathrowfinance, as of today, you have something like £400,000,000,000 of liquidity with this service around 100 that I that I mentioned, right, And, you have a new regulatory period starting in 2022, right, that, would reset, traffic, right? Of course, you could be in our case scenario where there's a a language in traffic recovery, but that that should be captured, for 20,021, or maybe even earlier if, the regulator thinks so. Right? So, in the end, we don't foresee a need for that. But as I said, it cannot be ruled out. Thank you, Ernesto. I am also from Nicholas. Geez. There's been a glitch in the system. I will get back to this question in a second. Bear with me. Just a second, please. Sorry. So, once again, thank you. From Nicholas Mora, finally, can potentially lower cost inflation in US and improve the outcome of the challenge projects, the I 66, and s r 400. Thanks, sir, and I call out for the question. Where there's different, effects, some could work in favor and some against, definitely, you could have, lower prices for, construction materials. Also, you could, struggle to get them, produce, maybe, right? So, What is true is that in the prior, downturn, around 2010, 11, really that, there was a benefit of that, but, probably there was no risk of shortage of, of production. So it's something that we're monitoring carefully. But, we cannot tell at this point in time. Thank you, Ernesto. The next question comes from Tobias Werner from MainFirst. I understand the provisions for cost saving programs for the group, but would like to get a better understanding of the exceptional non cash costs at Heathrow What were the capitalized costs of £52,000,000? How do you explain the 30,000,000 non cash costs for the transformation program? Hi. Thanks. Sorry. I mean, I'll explain the first one. I'm probably with the second one. There was a confusion. In terms of the capitalized cost of 52,000,000, that was CapEx, that was, let's say, designed for, investment like, refurbishments or shops or commercial layout or so that was, incurred and is not, foreseen in the in the future. Right? So you have to write out down, but that was something that was authorized into the military asset asset base. Right? So Right now, that's a write off that is accounting, but the, investment would keep generating, a, an allowed, return. Okay. Then, with the, 30, cost, for restructuring, It's not a cash cost in, in in in March, but it will be, for sure. Right? So, yeah, this will be an an outflow for restructuring but it has not been an outflow in the first quarter. So probably I should have made that, that clearer. Thank you, Ernesto. Also from TBS, can you provide us with an understanding of the fair value and the book values mentioned, please. Okay. There's not much, let's say science, behind them, right, when we talked about the book values, the book values are really, related with the kind of multiples that we were seeing, for the businesses, in the indicative business that we were, getting in 2000 and and 19, and then also from a comparable, transaction. Right? So we have applied those, those multiples, and the book values, as I mentioned, are roughly 800 Spain, 200 for international, 204, Amy. The rationale, really, for the, taking the impact of this loss or not engrossing that is that we don't know how these businesses will trade going forward, we don't know the multiples that, would be there. So the only size behind that is let's say, okay. We keep that, that book value that as you can tell, even with low EBITDA, it's a low EBITDA multiple in the in in general, but there's not more science to that. And that's the reason why we say that we will, as we get more, information, we can better assess, prospects going forward. Maybe we'll we'll we'll need to update that. We don't know. Okay. So it has just been a pure prudence approach of let's not increase that book value. There's not any feedback from any be there currently. Thank you, Erneston. Finally from Tobias. Why the big swing in the minority line to minus €13,000,000 from the €46,000,000. Well, that that was, that one is, is Sisi because last year, the, provisioning construction was taken for global consolidated projects, construction projects were basically, minorities were they're part of the responsibility in the project. Right? That's the reason why there was a positive. In that, in those minorities. Right now is the other way around minorities are from, areas and businesses that are making money. That's the the only reason in the in the swing. Thank you, Ernesto. The next question comes from Jenny Ping from Citi. It's a follow-up. Please On page 4, the traffic chart, you show traffic of March 28th to April 3rd and then April 25th to May 1st. Can you confirm the period in between? Did we see a similar fall in traffic? Yes. April saw similar, falls in traffic from the like the 1st days of the, of the month, give or take, maybe, some small difference. Yeah. Basically, overall, April had that sort of decline. Thank you Ernesto. The next set of questions come come from Anurag Agarwal from York Capital. There's a substantial opportunity from greater ecommerce growth as a result of the rise recent virus. Can you help us understand how big commercial accounts are as a percentage of the 47 under managed lanes and the tailwind to growth that we might see from this acceleration. Well, thanks, and rush No. We we don't provide that information and, it's something that, is a a speculative. We're looking at, the different potentially could, it could happen. It's not something we, can share at this point in time. Thank you, Ernesto. And finally from Anuraj, please, can you clarify your comment on page 6 when you say heavy traffic has grown from 20 to 40% in March year on year. Is this growth of heavy traffic in the managed lanes year on year or the percentage exposure to heavy traffic and the managed lanes. Okay. What this means is the growth in revenue share for the heavy traffic. So, in the road where it has grown less. So all heavy traffic has increased the revenue share in our toll roads. The lowest increase in revenue share has been 20% and the highest has been 40%. This is just illustrative because you don't have other data to do any model or compare, but we think it's a good example of, of the bigger and and bigger share in this, downturn situation. Thank you, Ernesto. The next question, comes from Nabil Ahmed from Barclays. Is there any update on the US toll road pipeline on Maryland, on others? What are the next steps and when? Well, the next steps are, now around May, 20th, we should be submitting the RFQ for, for Maryland, for the first project. And that this, in theory, scheduled to be awarded in February 2021. Also, we are looking to Georgia SR 400 to submit the RFQ, this month. And, well, there's, other, states considering things, there's dialogue, but things that is, not for us to to talk at this point in in time, but there's a, activity and discussion, even in current, a scenario to to re readverse them once there's reopening. Thank you, Ernesto. The next question comes from Martin Watal from Bank of America. Have you taken any impairments of the value of the Spanish services business in the last 2, 3 years? And if not, is it correct to say that the €800,000,000 book value that was mentioned for Spanish services reflects the historical cost rather than updated assessment for the market value of the business? If I'll recall correctly, I'll check on this, but we have taking any fair value adjustment on the Spanish, business. I'll I'll I'll recheck, but that's my my ID at the moment. Thank you, Ernesto. The next question comes from Alessandro Sala from Aventicum Capital Management. Could you disclose what your monthly cash burn in a zero traffic assumption in the second quarter 2020 for Heathrow and AGS airports would be? Well, he throw address what the expected cash burn could be. More than the average probably the last months of, Q2 could be around 170, but they are aiming to reach 150 later later on, so I don't have the path, the gliding path to that kind of, level. And AGS give or take, hovers around, 10,000,000 per month, with no traffic, as you were mentioning. Thank you, Ernesto. The next question comes from Tobias Werner from MainFirst. So apologies. The next question comes from Borja Castro from. Could you please remind us what the debt associated with the services assets is? Well, for the services, divisions, we have a net cash position external of €109,000,000. And as I said, there's a substantial part of this in in, in broad spectrum. Thank you, Ernesto. These are all the questions we have in the system currently. I am unclear if this new system may have questions which are in the process of entering, if there's anything which has not been answered or which arrives after this comment, we will make sure to answer you after this call or via email. Thank you very much. I'll now pass the floor back to Ernesto. Okay. So thanks for attending the call and for bearing with us on this unprecedented times. We will follow all the behavior, closely, and, we'll, meet you soon. Okay? Thank you. Bye bye.