Earnings Call: Q4 2019

Feb 27, 2020

Hi there. Good evening. So we have about 60 participants connected. Yes. We are. Thank you. Perfect. So I'm gonna count down from 6 now. When I get you for, you wanna carry on counting and then when you get 0, you're ready to start. So 6, 5, 4. Good afternoon, everybody, and welcome to Ferrovya's conference call to discuss our 2019 financial results. Just as a reminder, both the results report and the presentation are available to you in our website and should have been sent to you via email. If you have any questions, you may ask them through the form included in the webcast or via email to ir@feravial.com throughout this conference call. Your questions and who they are from will be read during the Q And A session at the end. With this, I will hand over to Mr. Rafael Lelpino, Ferville chairman, who will be leading the conference called Rafael. The floor is yours. Thank you. Good afternoon, and thank you for it. Thank you. Yeah. Thank you. Good afternoon, and thank you for attending the 2019 results presentation conference call. I'm joined today here today by Mister Ignacio Madri Dejos, our CEO Ernesto Lopez Motto, our CFO, and the CFOs of each of our business divisions. We will take a closer look at the strategic update on 2020 expectations at the end of this presentation, but in terms of our results, 2019 has been another strong year operationally with a specialist solid performance of our infrastructure assets. Our Texas managed lanes have performed well above expectations supported by the growth of Dallas Fort Worth Region the improved connectivity in the corridor following the completion of several improvement construction works during 2018 and the ramp up process of NTE35 West, which is still in its 2nd year of operation. 407 ETR has maintained its robust results, while at the same time remaining in customers' good crisis in terms of customer satisfaction and value for money. Following the tariff increases, customer satisfaction levels have remained at close to 90% while 80% of users agreed that total cost are offset by time savings. For the reason, it is paramount that we continue focusing on having top notch service levels on our toll road. Heathrow continues to reach new record high traffic levels with close to 81,000,000 passengers traveling to the airport what has been the 9th consecutive year of traffic growth. This has been achieved while services standards remain at top levels. And finally, we have received a new managed lane that was signed out August, the NTE 35 West Segment 3 C. A northbound extension of NTE35 West, which goes straight to the heart of the Dallas Fort World Logistics hub and office parks area and which make this our largest managed lane in the region. There were also positive news on the financial front. We successfully completed the refinancing of the NTE managed lines debt lowering the cost of financing and extending maturities. We saw an increase in the dividends received from our infrastructure projects which reached €725,000,000 in the year versus 623 the year before. 407 ETR increased its dividends to shareholders by over 14% to 1,000,000,000 The NTE paid its first dividend to shareholders, which reached 292,000,000 US dollars, and Heathrow paid out £500,000,000 to its shareholders. During 2019, we have maintained our strategy of rotating mature assets and completed the sale of 65 percent of our sold for you €451,000,000 at evaluation which was over 60 sent above that of market consensus showing the strong appetite there is for this type of asset which is the main focus of infrastructure money being poured into the market. We also advanced the on the sale of our services division through the agreement to sell Broad Spectrum, which was reached last December, for an enterprise value of roughly €327,000,000. We expect this transaction to close during 2020 when we should receive the cash impact of the sale. We are purely remain committed to the full divestment of services and we'll explain later on how we expect to undertake it. Finally, ESG remains at the core of Ferabella's strategy and the last year, we received a globally leading position in the construction and engineering sector by Dow Jones Sustainability Index. And awarded an a list by CDP for our leading effort against climate change. In the following slide, we see some of the main figures of 2019. Revenues grew by 2.6%. Like for like to over €6,000,000,000. EBITDA impacted by the euro $345,000,000 provision in construction from first quarter 2019 and including the impact of IFRS 16 in applications since 2019 reached 121,000,000. Net income reached €268,000,000 impacted among other elements by better equity accounted results the capital gains from asset disposals and results from our discontinued operations, including the sale agreement of Broad Spectrum. Dividends from infrastructure projects, as I've just mentioned, totaled €729,000,000. And our operating cash flow reached over €800,000,000, leading to a net cash position at parent company that is excluding infrastructure projects of euro 1,600,000,000, which is a solid and comfortable level when facing the attractive infrastructure pipeline we have ahead of us. With this, I hand over to our CEO, Ignacio Matty Repos, who will discuss the operating performance of our business units. Thank you, Rafael. And now we'll give more detail for each of our businesses and main assets starting from toll roads. Our revenues from toll roads grew last year like for like 28.5 percent, supported by higher contribution from our managed lanes and traffic growth in most of our assets. EBITDA grew by over 33% with a 67% contribution from North America our main geographical target to date. We continue receiving good dividends from our toll roads with a total of €494,000,000 last year. Rafael mentioned before, material rotation is a key part of our strategy. As such, in 2019, we closed the sale of our soul. We sold 65 percent of the equity for €451,000,000 and signed a call and put option the remaining 50% stake to be exercised in the next 3 years. The sale has implied net capital gains of €474,000,000. We also sold 11.75 percent of Ruta El Caca in Colombia for 1,000,000 with a net capital gain of 1,000,000. Or Texan Manas Lane's had the 1st debt refinancing and dividend after 5 years operation. Last December, we completed the refinancing of the NT debt some $1,300,000,000. The new debt instructor will reduce the average cost of debt and stem debt maturity. If we compare yield to maturities, the cost of debt has fallen from 5.4747 percent to 3.8% by 167 basis points. Also, NT paid its 1st dividend to shareholders above for initial expectations, thanks to the strong performance of the asset. NT paid $292,000,000. To be shareholders of which €166,000,000 were received by Ferrogial. We expect the refinancing of LBA will follow this year as will the first dividends to be paid by these managed lane assets. 407 results were published last week. But I will still like to highlight this performance last year with an 8.83% increase in revenues and 8.1% increase in EBITDA or 8.8% if we exclude the positive one off from 2018 and an 87% EBITDA margin practically flat compared to previous year. The traffic was flat, minus 0.2% in the year, affected by severe weather conditions in first half and the 4th quarter. Excluding the weather effect, traffic will have been up by 0.7%. The 407 also announced a tariff increase that has become effective on February 1st, introducing seasonal tariffs with the aim of maintaining excellent service standards in the toll road and responding to the different usage levels we have observed. The 407 pay 1050,000,000 US Canadian dollars in dividends in 2019, a 40% growth in the year, and it is 6% above the optimistic case published in our December 2018 model. In addition, the 407 board approved, approved, 312.5000000 Canadian dollars dividend for the first quarter of 2020, which is 25% above what was distributed in the first quarter of 2019. Dividends who grow above EBITDA as long as we have a strong performance and maintain the 1.7 target senior inventor debt service coverage ratio. But the formation will be supported by the strong macro drivers in the region with both population and personal income growth. We remain focused on maintaining the level of service at the 407 while maximizing revenues. We continue to have an outstanding performance at our managed lanes in Texas. NT and LBA have finished the ramp up period. But they are still showing very good traffic growth. While the 35 West is still in this ramp up, even when the traffic is close to the other 2 managed lanes. NTE EBITDA grew by 33% with traffic up 14.7% supported by the full opening of the 35 West in July 2018, which connects with NTEs 71 and the opening of the 18, 183, tax price in October 2018, which connects directly to NTE segment 2. The traffic conditions in the NT managed lanes have led to toll rates above the soft cap in several locations to guarantee customer service. LPGA had a good performance, especially in the second half of the year, leading to EBITDA growth in 2019 or 24%. Traffic was up by 9.1% impacted by the opening of the 183 tax breaks in October 2018 which connects directly to LPGA 71 and construction at 100 and the 75 US at this section with the PEB turnpike. 35 West had a 25.3 increase of traffic in the 4th quarter compared to the same period last year as driver returned into the highway, exceeding pre construction levels, and an increasing share of that traffic choosing the managed lanes. 4th quarter 2019 EBITDA grew by 85% from 12 to $22,000,000. One of the things that has led to the very strong traffic performance has been dessert in commercial traffic. The fact that there are logistic facilities and office centers with surround or 3 managed lanes in the region as well as the president of the Fort Worth Alliance and the Dallas Fort Worth Airports has contributed to the growth in commercial traffic which is less price sensitive than light traffic. In addition, it is worth highlighting that e commerce represents today already 13.3% of US retail sales and is expected to continue increasing. E commerce, together with increasing same day and next day delivery, sulead to growth in commercial traffic. As mentioned previously, the improved connectivity of the NT and LBA through the 100 83. The express contributed to the traffic growth in 2019. Going forward, there are further network improvements works that will help to increase traffic beyond 2024 once construction works are over. To the east of LBJ, the construction of new lanes in the 6:30 5 East will start this summer. In the n t area, the 820 loop will go through a reconfiguration and construction until next year or 2022. The intersection between NT35 West will also go through reconstruction and there will be direct connector flyovers built to 35 West in what is called the mark for improvements. And to the north of the 35 West, the construction wars for the extension segment 3 C will begin and continue until 2023. Therefore, we may see some sorts short term traffic effects in the segments of the Manas lanes, which are closest to the improvement projects, but we should expect a new surge of traffic from 2024 onwards similar to what happened in 2019. The NT3C is a 60% extension of our 35 West managed lanes that with this extension will become our largest managed lanes in Dallas Fort Worth. And it is also the managed lanes with the largest percentage of commercial traffic. The total length of the project is 6.7 miles northbound with 2 minus lanes in each direction. Construction wars are expected to be completed in 2023. The Managed Lane will have a maturity in 2061. Total investments will be over $900,000,000. Sintra participation is the 53.7 percent with an equity investment of $86,000,000. I think it will add a lot of value improving traffic speed north of Fort Worth. Moving now to North Carolina. We opened the northern portion of the 87 on June 1st last year and the southern portion on November 16th. We are operating the managed scenes with dynamic pricings since December 2019. As you know, this road connects Charlotte, Uptan, with Mursville Residential area. So much of the flow is commuter traffic. The performer has been according to expectations so far. Although it is still very early days. However, we have already seen an improvement of the speed across the entire corridor, improving customer satisfaction, and recovering volumes from pre construction levels. We do not talk often about them, but it is good to remind that our portfolio includes other toll roads. They are mainly availability projects in countries with low government bond yields in the Spain, Portugal, and Ireland. These are also long duration tow ropes with an average maturity of 16 years overall. In general, the store rolls had a good performance during the year. Moving now to airports. Hydro also published his results with a record high number of passengers close to 81,000,000 a 1% growth, the 9th consecutive year of traffic growth. It also had a good financial performance with a 3.4% increase in revenues, supported by a 4.9% increase in aeronautical revenues. Helped by a favorable long haul passenger mix and recovery of previous GRU dilution, also impacted by the introduction of the commercial deal with the airlines. Adjusted EBITDA was up 4.6% helped by IFRS 16 excluding the effect will be 1.7% up. As for AES, traffic fell by 7.8% with a reduction in all three airports. Mainly on the back of Thomas Cook and Ryanair Closer in October 2018 in Glasgow. The cancellation of ECGS route to Gatwick and London City from Aberdeen and fewer rotations to Manchester and Belfast by 5 B and cancellation of the route to Amsterdam from southampton. However, EBITDA reduced by 2.6% thanks to better other revenues. Dividends received from our Airports division amounted to €183,000,000 in 2019 it is €7,000,000 less than previous years. Hydro's strong results have been achieved with Hero maintains extremely high service quality with an overall score of 4.17 over 5 and 82% of passengers rating their experience as excellent or very good. Hitrose terminal 5 has also been named Best Airport terminal for the first time. Hydro is also recognized Best Airport in Western Europe for the 5th time and best airport in the workforce shopping. The per 2 punctuality and baggage connection also have improved year on year. And all this has happened while we were running the asset at 99.1% capacity in terms of aircraft movement. Today for a little room for additional aircraft. 1 in every five seat is still empty within those carriers, which implies an important opportunity to grow. Hidro remains committed to his net net 0 carbon objectives through his plan Hydro 2.0. This plan, which has been discussed before, includes as objectives to have carbon neutral airport operations by 2020 to have a 0 carbon airport by 2050 and to have a carbon neutral growth from the new runway. The plan also relates to the expansion in that Hydro has committed to it being sustainable in the long term. In his airport, expansion consultation. He has presented his proposal for an environmental managed growth framework explaining how his growth will be managed in accordance with environmental limits on air quality, surface access, noise, and carbon. And supports growth in flights at the airport while ensuring Israel's environmental performance stays with maximum limits. Moving now to construction. The division has performed operationally in line with the guidance we have given the market since first half of last year. A 0 EBIT margin excluding the impact of the $345,000,000 provision registered in the first quarter of the year for estimated future cost in US Projects. We are comfortable with the current level of provisions. As we explained in the Horizon 24 strategic presentation last month, we are taking certain measures like having a local presence in Norte geographies, which includes US, UK, Canada, Poland, Spain, Chile, and Peru, increasing the amount of cell performance in our projects, and they're taking organizational changes with a clear accountability, implementing measures in place to increase risk controls to allow us to respond faster to any potential issue that may arise from our projects, redesigning key main processes like bidding, and finally improving our technical capabilities. This will lead our EBIT margin to a start improving already in 2020 when we expect it to reach above 1% and continue improving their own until we reach our targeted 3.5 percent EBIT margin by 2024. The order booking construction reached €11,400,000,000. It is a 2.8% like for like increase. With 88% international and with civil awards as the largest cement with a 79% and also targeting at 25 between 25.30 percent of revenues from internal concessional projects. The interest are in the construction order book, excluding Webex, reached 47%. The order book figure at December 2019 does not include pre awarded contracts or contract spending commercial or financial agreement, which amount to over €600,000,000. As for the cash flow generation, 2019 result resulting in higher operating cash flow than we had initially anticipated. In fact, by midyear 2019, we expect that there will be to be a castor units of some €300,000,000, but in the end, the division has generated positive operating cash flow of €132,000,000. It has been possible on the back of a positive impact in with more activity at the end of the year, advanced payments in US projects, which had been higher than expected, a real estate sale in Spain but the bebas was sold for €69,000,000. And finally, to the fact that only part of the €345,000,000 provision has been cashed out. The amount has been €143,000,000. Going forward for 2020, we expect to see the cast units which has not taken place during last year. That is minus €300,000,000. We are estimating the same amount we mentioned by middle last year affected by the cash out of the provision and a reduction of advance payments. If we move now to services and remember that the division has is included as discontinued activities since the end of 2018. Services saw a positive performance, especially in the Spain and international. Spain saw revenues up 3.8% and EBITDA up 5.3% both like for like. With a 30 basis points expansion of margins will reach 10.7%. International so close to 20% revenue growth like for like supported by the growth in US and Chile and Chilean oil and gas activity. EBITDA was up by 26.3 percent like for like. As for the UK, EBITDA excluding utilities, collection, and environment that are considered discontinued activities reached 56,000,000 British pounds. Just as a reminder, we signed last year an agreement to terminate the Birmingham contract which will not have an impact on favorable profit and loss. In this agreement, Amy has paid 160,000,000 British pounds in 2019 and there are 55,000,000 British pounds to be paid in the next 6 year. Aside from the debasinal performance, we remain committed to the complete of the services divestment. We signed an agreement to sell Broad Spectrum, our Australian New Zealand operations last December to BENTIA, we expect it to close in the 1st 9 months of 2020. The agreement was for an enterprise value of 1,000,000 and an equity value of €303,000,000. As we have explained before, the process which has started off as a potential sale of the business as an international platform will now be based on subset of the regional parameter with transactions taking place on a specific geographies. I will now hand over the call the call to Ernesto who will go through the main financial results of the year. Thank you, Ignacio. Good afternoon. Good morning. Okay. So I'll take care of the lines below the operating performance. Starting with the disposals and impairments. And here we have the main item is the capital gain from the sale of a of household that reached a €475,000,000. It's important to see a as Ignacio mentioned before, the appetite from investors from this for this kind of infrastructure asset. And if anything, the start of the year sees more yield compression in these assets. Other items included are an impairment of the net worth in Otema. You know that we carry this out every year, just pending the dispute in terms of the changes unilateral changes to the concession that were made in the past, and we are claiming compensation. In terms of, other items, including there, we also have the Ruta Del CACau disposal. If we move to the financial results starting with the infrastructure projects, financial expenses, we see a figure to an expense of 263 And basically, the increase vis a vis 218 is on the back of having a full year of NT35 West Open. Also, at the start of operations on I-seventy 7 and the NT refinancing with the, the expense of the initial fees of the regional financing. Okay. This, it was done with very competitive rates. If we look at the X infrastructure project level, we see an income of 6 €69,000,000. This is a better result than last year and is basically on the back of hedges, equity swaps for performance here, plans for employees and, and management. Okay. If we move to the equity accounted results, Here, we have the, the growth, the positive impact of the 407 ETR and also Heathrow and the AGS. In Heathrow, you see €106,000,000, and this is helped by the improved on the operational improvement on the operational performance. And also by a reduction in inflation expectations that help help positive P and L on the inflation hedges. Okay. You probably have seen that today there was a the judicial review on the airport national policy statement was out. And, Heathrow's view is that, management will ask for a permission to appeal this ruling. Also that the, let's say the AMPS is, and suspension because of the non compliance with the Paris agreement on climate change, and Heathrow Management has a strong view that this can be sorted out. And of course, the government has to take the final action on this international policy statement. In terms of impact, if, this was not likely to, to go ahead. So expansion was not likely to to go ahead. We would keep the current investment in terms of, design and, and expenses 450. We should keep that in the in the RAB in the regulatory asset base and have a regulated return. This is part of the regulatory framework. Right? So we shouldn't have an economic impact if this does not go ahead. But accounting wise, yes, we would have an impact. We would have to lightly write that amount down. And the impact on our P and L, the bottom line in the equity accounted line would be 100 €1,000,000 negative. You have a more explanation on this on the full note. I want to stay longer on on this. Okay. Then, you have the, the corporate income tax of a €47,000,000 expense. And here also I will refer you to the note in the financial statements, but the main cost for this is that the capital gain on the sale of household is tax exempt. Right? So that, it means that you have a lower accounting tax rate. Then you have the net profit from discontinued operations. And here, remember that at the end of the 1st 9 months, we had a result of €28,000,000, but then the sale of Broad Spectrum, we mentioned that in the quarter, in the last quarter would impact with a negative 170. So the 198 reflects the combination of the first 2 and then the results of the rest of discontinued operations in the last quarter. Okay. So, I will move then to the next slide to review the cash flow generation And you can see that we had a very strong end to the year and year overall. I think that the last quarter, if we go to the 1st column where we see dividends from projects, had a very strong performance. I mean, we had dividends ahead of our expectations in the 407 NT and Heathrow Airport's holdings, right, Then if we move on to the right, we see the evolution of construction. I mean, of course, we have the EBITDA and then the impact of the non cash uh-uh construction provision in the first quarter. We have following to the right the cash out relating to that, provision. And then for the ride, we have a 129 additional provision. Here we end with construction along the lines as Ignacio described before that we guided the market to And the important thing is that the the main, the caption here comes from risks provided for in budimax related to industrial construction. And the the rest is really scattered among the, the very different projects just covering for additional costs. So, we are happy with this end of, of the year and we see that the working capital evolution that is positive 165, was also helped by the construction performance. And here, we had, works building advance in the US and positive working capital evolution in Boudemex. Also, in these figures, we have, cash from the services division And as Ignacio mentioned out, Spain had a very strong, year in in cash generation in in services. Okay. Then if we move on, to the right, we have, investments close to €300,000,000, the investments that we already mentioned and shareholder remuneration. Ending the year with a net cash position ex infrastructure projects of 1.631000000000 And this figure takes into account a net cash position for the services discontinued operations, ex infrastructure price, of course, of 158 1,000,000. So as I said, a very strong performance in, in in cash, at the end of the year and for the overall year. And now, I would hand it back to Rafael. So now going back to what we mentioned at the beginning, Let me go through some of the main figures mentioned and which show the performance during this past year. We had a 14% growth in 407 dividends on the back of the assets strong performance. The strong performance of NTE led to Ferrogel receiving $166,000,000 a euro from the managed line. The strong appetite for high quality mature assets in the market has led to evaluation of household in the sale undertaken in 2019. 60% above that of the market's consensus. NTE 35 West continues to perform above expectations with traffic growth of 25.3% in the fourth quarter of 2019. Heathrow reached its 9th year of consecutive growth was maintaining it services standards. And finally, an improved net cash position ex infrastructure assets of 1,600,000,000, not including the proceeds from the agreed sale of project spectrum. Now a quick word looking into the future. Ignacio already explained last month what the group's strategy would look like in the next 5 years during the presentation of our Horizon 24th strategy. The application of this strategy will already to start seeing results in 2020. We expect the strong performance of our infrastructure assets as well as the first dividend from LPG managed lane to lead to strong growth in dividends received from infrastructure projects. The company's focus will remain on infrastructure projects with high concessional value. We have already identified a pipeline of €12,000,000,000, of which 10,000,000,000 are in toll roads, mostly in US managed lanes, which will remain our core target. As such, we have received this month the first RFQ for Maryland's first project to come into the market. Will be working on this process during 2020 and expect the project to be awarded at the beginning of 2021. Construction remains key to our strategy as a way to win this high complexity greenfield projects in toll roads, which are the ones we find the highest returns in. Where we have a larger competitive advantage and where we're better suited to manage the existing risks. This being said, we realized that changes need to be made to the division to improve its performance and profitability and have a target of 3 a half percent for 2024. During 2020, we expect it to we expect already to have an improvement versus 2019, and our target is an EBIT margin over 1% for the construction business as a whole. We remain committed to the completion of the services divestment. And all of this will be done with the new operating model, which aims on having a more agile, innovative, and efficient organization. The total savings of this plan should reach an annual amount of €50,000,000 with 20,000,000 of savings reached during 2020. All of what I have mentioned for 2020 is straight from one objective to continue creating shareholder value. Shareholder remuneration is a crucial element of this, and our proposal for 2020 is for our shareholder remuneration to increase by 5.8% to a total of €550,000,000 with the first scrip dividend of €0.32 per share and a second script dividend of €0.43 per share. A maximum share buyback of 360,000,000 euro or 25,000,000 shares has also been approved. Thank you very much for your attention, and we're now ready to answer any questions you may have. So the first question comes from Elodiral from JP Morgan. A question on Heathrow. Heathrow. What is your view on the likelihood of the new runway to be approved And if not, what would be the consequence for Ferrer? Thanks, Bagonia. We'll we already covered that in in my speech. Right? So, I just reflected on, Heathrow's management comments. Heathrow is, going to ask for permission to appeal. And in terms of the AMPS ruling, I mean, the lack of compliance with the Paris agreement on climate change, Hitro's management has a strong view that it can be sorted out. But as I said, finally, the government will have to decide on the ANPS. And in terms of impacts, I already covered that from an economic point of view, all the amounts, should be part of the of the RAB, we will have an impact of writing them down from an accounting point of view of €100,000,000 at the end of 2019. Thank you. Also from LED, do you have a view on the potential impact from the coronavirus? Thank you. Thank you for the question. Of course, I mean, the coronavirus main concern is about the the health of, for employees and about the whole people related to to us. And, well, so far, We have not been affecting the supply chain, not any effect also in the toll roads for the time being related to the traffic, of course. And the the only is, could be something related to the to the airports. However, as was commented yesterday during the Hydro's results presentation, the reference that they are using is the the one from the SARS outbreak in 2003. The at that time, the traffic was down 2.8 percent. Of course, we are following all the protocols defined by the by the health department in the in the UK. And we follow the situation very closely. No? So it's something that see how the situation is evolving, but the only reference that we have so far is that that related to to the outbreak in in 2003, with the stars. And and as I mentioned, the the effect in traffic, but nothing more for the time being. I'm will command this time with the first quarter results. Thank you. And lastly, also from LADA follow-up on Heathrow, do you see a risk of lower dividends? Okay. Heathrow also answered that question in their management presentation. I mean, with the base case, they don't see any any risk. In fact, the first quarter dividend was announced in line with the expectation at the end of 2019 from their investor report, and Heathrow remains with very, ample headrooms in all their financial parameters. So, I mean, we don't see that at this point in time. Thank you. The next question comes from Daniel Gandoy from JB Capital. Would it be reasonable to annualize the first quarter 2020 dividend for the 47 ETR to calculate the full year dividend, or should we include there was some extraordinary item in the first quarter of 2020? Of course, the decision about the the dividend in the the 407 is a decision by by the board, not at least taking every every quarter. And that's based on on the performance of the of the 407, mainly related to the EBITDA and the operating cash flow. Of course, we extrapolate the EBITDA of the dividend of the first quarter to the full year. It will be a 19% increase. And as you know, in the in the last years, the we have had an increase above EBITDA, but the decision will be taken every quarter we have to wait to the performance in the following quarters to to confirm that, will be the same dividend for the year. Thank you. The next set of questions come from Stephanie Death from RBC. Could you please update us on the 407 ETR potential stake increase? Well, there are there are no news, and the hearing, I think, will be in April. I think it's 19th April, 16th April. Yes. So after that, it will take probably a few months to get a decision. So, it will be by midyear probably. Thank you. Could you please update us on the timing of the service or disposal? Well, as as committed several times, fully committed to the to the sale of the services division, and as commented also, we are moving from a global platform to sell it by country, basically. So we are proceeding to to that to sell geographically the service division is ongoing. We cannot commit on any specific date and we'll announce as soon as we have a news of any specific agreement to sell any of the parts. Thank you. Can you please comment on the dividend expectations from the US managed lanes 2020. We don't give, a forecast, not the dividends. Only thing that we gave during the Horizon 24 plan was a 1,000,000,000 dividends coming from the toll roads. But this is the, I think, the only guidance that we have done. Yeah. Also, also from some, a couple of years ago, 3 years ago, there was the business plan published. It's a little bit old. Yeah. That is the only guidance out there and the performance is better. So we we hope to beat that. Thank you. Can you please give us the timeline on the Maryland project tender? Yeah. I think the the tender, the RFQ, it will start in April. I think after that, we will go the, I mean, the basis of the, how the the project is going to be launched. I think it's going to be July. If I remember well, I think that the the bidding process will be in February and the closing will be meet next year. No? So I think the what we will see is more information of how the process is going to be exactly defined in summer. And probably they've been selected in around February or March next year, and they're closing the mid next year. And also it's still more than a year ahead. For this project. Thank you. The next question comes from Guillermo Fernandezao from Kepler Chevra. Any color on how the traffic has began in January, February in the 407 ETR. Well, I think it's, it is too too early to to give any any guidance, no doubt. So it's going to be the traffic in the year in the the 407. Of course, there are many factors. The economies is performing well in the in the area. Of course, there may be some price elasticity is too early to define if there will be any because the increase was in February and there will be another increase during the summer. Of course, there are some weather effects, not that the last year were negative. We'll see how it looks this year. We have also one more day in the during the year in the calendar. So I think there are several effects. It still is too early to give any guidance and we have to wait at least until the first quarter to be more information about that. Thank you also from Guillermo. Any particular asset did you consider mature and a candidate to rotation in 2020? I about that as as commented previously. Of course, we we're analyzing any any opportunity that we may have to rotate mature assets, so still we have not taken any decision about that. Thank you. And lastly from Guillermo, is Heathrow going to ask permission to the government for the expansion? Well, what I mentioned before is that Heathrow has said that they will ask for permission to appeal and then also that the condition from the usual review could be sorted out and they are willing to help the government resort this out. Thank you. The next question comes from Nicholas Mara from Morgan Stanley. Can we discuss the soft traffic in 407 ETR in 2019, especially the weaker mix? With lower weekday traffic versus stronger weekend. Why has this taken place? And moreover, can you explain your view on schedule 22 payments? Yeah. I I think about the the traffic last year. No. I commented that during my presentation, not at the it was a negative effect, because of, of weather. And, it says, commented was a a negative effect. Without that effect, it will have been 0.7% positive. We have always, as usual, no, we have some positives and negatives during the during the year. Of course, the economic growth is a positive that the elasticity was negative. I think the area is growing is growing well. Also construction in the 401 is may have some positive effects on some point of time when it's, solved, then we have, the other way around the negative effect because of the the finalization of that type of jobs. I think that, in general, we don't disclose information about the type of graphical segment. I think we this commercial relevant information. But as commented, usually, we use as much as we can all this information in order to to first, to give the best service to our customers, so they can have, they have a traffic flow that is adequate, that equates the speed in the, in the 407 corridor. And also to maximize the revenues. No? So based on that, we take the decisions and based on that, we define the, the price increase for the following years. No? In terms of the schedule, 22 payments also is, is something that is, is part of the same equation. No? First is it's not a long term effect to be because it has a a initial theoretical evolution of the traffic at some point of time reach the the cap that was expected for the 407. So I think that after a few years, we'll not see any any effect from schedule 22 payments because we'll be above that threshold and and then it it will not be an effect. In the short term, in the next few years, it may be the case. That we are below this theoretical, no evolution of the of the traffic. But of course, we consider that as part of the the equation of the of the first looking at the customers and making sure that we have an adequate traffic flow in the in the 407, but also looking at the revenues and looking at additional increase in costs that could come from this schedule 22 payments. So I think it's part of the of the question that month has been very small during the last year. It's also at the same time very difficult to calculate because it's based on the specific days. And and I think that it's not the basis. It's calculated at the end of the year. There may be some effect in following years, but, I think it will not affect, or have an impact on the increase in revenues because as we commented previously price elasticity and the price increase and the customer will be considered whenever we we try to maximize the revenues. Thank you. On the Texas managed lanes, can we talk about truck traffic and can you help us understand the penetration levels between NTE35 West and LPG. And what was the step up in number of days when traffic was above the maximum threshold to switch to free pricing at NT over 2019. As you know, we don't give information about trucks in our in our managed lanes. At the I think that this is an important part because of the commercial traffic as explained previously, but I think it's price sensitive information. That is important for future managed lanes, and we want to keep that confidential, and we are not disclosing any information about about that, no, about reaching the the gap we did in the NTE during the last year in several locations. And also in the 35 West, one of the segments we've reached the cap in, in the month of December, and we will expect that that may be the case during DCR, especially when we approach to the summer months in which the traffic is more intense. Thank you. The next question comes from Stanislas Scott Per from Lazard. What kind of leeway do you feel you have for the for for a further price increase at US managed lanes and at the 407 ETR. Well, I I think that, of course, I mean, you have to to take your own assumptions. No. But, you know, what are the variables, not that we are taking in order to increase prices. No? We look to make sure that, first, there is a traffic flow at a certain speed in our managed lanes and the the 407. We can have a more dynamic pricing in the managed lanes in order to make sure that the that is not a congestion at that time. And as you know, also the 35 West is lagging behind, you know, the because of it's ramping up still compared to the to the LBA and the NTE, you know, also as, as you know, 77 is starting dynamic prices just in in December. So I think it's ramping up. Of course, It will be based on the traffic. It's pricing dynamics and the formation that we have. And and based on that, they will take the decisions. Not so it's very difficult to to anticipate how this will evolve because it will depend on the traffic. But, as commented, we see a very strong economy. We see that as a forward that is growing the very strongly. So I think that we feel comfortable with the our pricing dynamics and how we'll apply that in the future. You will see next quarters how this price is evolving. In the case of the 407, as you know, there are 3 2 increases announced and one decrease during the year. Again, to take advantage of the of the seasonal and the traffic that they have more traffic during the summer months. And again, we try to maximize customer service and at the same time, our revenues. No. So that's why we have a first increase in February that has taken place already. A second one that will happen during the summer months and then later on during the during the winter. No? It has already been announced, and you have that information. Thank you. The next question comes from Martin Wathelf from Bank of America. Would you consider divesting your stake in Heathrow if capacity expansion was definitely not to go ahead. I think that Theodore is, under any scenario at attractive, very attractive asset. Is a is a very good infra asset as has commented the excellent customer service, rated as one of the best in the in the world. And as as commented, several times, we expect anyhow to have some CapEx and in the following year. That will be that will be attractive. Still the turnaround away I think that is we are still thinking that they will appeal and we have good options that they will happen is, in my opinion, is very well needed for a a global UK. I think it will also fulfill with all these environmental concern and being carbon neutral. So I think that there is no reason not to happen because it fulfills all all the requirements, no needed for growth economic growth in the U. K. And also to be a global hub, taking the depression that has been taking today, that has today, So for us, we consider still that this strategic relevant asset that could generate value under any scenario. Thank you. Also, from Martin, would you consider divesting other mature assets such as the AGS Airports? Well, we are not we are not considering that. I think there's a it's a we don't see that a mature asset yet is, I think, is still in spite of the lack of, traffic growth last year. I think there's still potential in the have any material restructuring expenses in 2020 related to the implementation of the cost savings plan. Yeah. There could be some cost. I mean, we are finalizing the assessment I mean, we're talking about close to maybe €30,000,000 something like that, but it's a preliminary figure. We'll update the market when we have the final assessment. Thank you. The next question comes from Robert crimes from Insight. Can you comment on the slowdown slowdown year on year average tolls per transaction in the managed lanes in the 4th quarter, especially the 3% in LBJ. Well, the, the LPG on the last quarter at the peak has been very close to the makeup and the traffic conditions didn't make for the soft cap being raised. Right? So it was close close to that. And therefore, we didn't have such an athlete. But, of course, with traffic conditions changing and the cap evolving, this could change in the in the future. Thank you. The next question comes also from Nicholas Mora from Morgan Stanley. When do you expect to pay out the provisions on US contracts and the other contracts over 2020, 2021. Yeah. Most of these provisions that that the the cash out will happen. As you know, this is coming mainly from 3 construction projects, the I77, the Atlanta project at the I-sixty 6, the I-seventy 7, as you know, is almost finished already the construction. But the I-sixty six will happen during the next 2 years, same as Atlanta. So we'll see that the that provision that is especially during this year 2020, but also we'll see part of it in 2021. Thank you also from Nicholas. When will you start contributing equity into I 66? And by how much? Okay. The contributions will happen basically 22 and 23 are the main years and also 24. I mean, the final amount is close to $700,000,000. Thank you. The next question comes from Jose Manuel Arias from Santander. What is the recurrence of the scheduled 22 payments in the 407 ETR? We learned the first 70TR, was under the 2nd congestion payment, in the fourth quarter in 2019, by we assume about CAD 2,000,000 Do we have guidance for 2020? No. It's a as as mentioned, this is scheduled 22 payments. No. That is the way we call it. They are calculated after the end of the year. I'm paying April. Is very difficult to calculate because it is based on certain specific days and how the traffic is in these days compared to certain target that was defined long time ago. So it's a it's really very difficult to calculate how it's going to perform during the year. Our expectation is that yes, in the next few years, there will be some payments. We cannot say because we don't know it will depend on the on the traffic in certain specific days that how much it will be. So I think that still we need to we'll need some time to to, to know exactly how much will be those payments. But as commented previously, after these few years later on, we don't see that there will be any any further payments because we'll read the threshold that has been reached the threshold that has been defined. The number is still is not fully defined and as you know, it's a payment to the state that it will be done. I think it's in April. Regarding previous questions, sorry. I just, I did slide the 1 year all the schedules. So instead of 21 through 23, the injection on the I 60 six is from 2020 through 2022. And if we translate the dollars into into euros, He said just around €625,000,000. Thank you. And also from Jose Manuel, could we have your thoughts on the dividend remuneration following today's announcement in terms of share buyback and a rise in the annual dividend? Well, you have seen that we had strong close to the year in in cash, infrastructure is performing. And we thought as, you know, we decide each year. And we thought that they they had demerit to propose an increase for this year's remuneration. Thank you. The next question comes from Nabil Ahmed from Barclays. Can you please quantify the traffic impact expected from the network improvement in construction works in the managed lanes over 2020, 2024? No. I think that we cannot, I mean, we cannot give them, but we have not disclosed that kind of information is difficult It's very difficult to estimate also at the same time because some of these improvements, I mean, will affect only specific segments. The war sometimes is only at night and it's not during the day. So he made some places start later and I will finish sooner. So I think this is very difficult to anticipate how it it will it will affect the traffic And also, of course, it depends also on other factors. No? But it's clear that this after 2024, we'll see an an improvement the same way we'll have seen during 2019 in the traffic because we are increasingly improving the connection between the different manas lanes and I think the traffic will flow much better after all these improvements. Thank you. Do you have any interest in ADP in France should the privatization process restart? It's a we don't know yet if it will happen and when it will happen, and still we, of course, we'll need to have some information of, whenever it is announced that they are selling any any stake if they decide to do so in order to analyze feas interesting for us or not. Thank you. The next question comes from Bruno Silva from BPA. In the 4th quarter working capital evolution, how much was due to prepayments and out of these, if any, how much were related to own group concessions? Okay. In the in the the the total of the year was really 100 and and 30, €1,000,000. And the most of that was in the in the 4th quarter. I won't differentiate between the group companies and the and external because all this is done on an arms length basis. So, there's no point on differentiating. So 130 is the number for the year. Thank you. And also from Bruno is the NTE EBITDA estimate of US dollars 146,000,000 published in the concession zone budget. For 2020 aligned with Ferabial's own budget? We don't we don't disclose that information. There's one further questions which should be arriving. Please hold. So the last question comes from Charles May Nadeer from Kempen. Could you please give more granularity on the 2020 construction EBIT margin expectations per division? That is No, we don't we don't disclose that information. No, we only see the 1% EBIT margin for the whole construction division, and this is the only information that we are giving. Thank you. There are no further questions. Well, thank you very much for attending the conference. And, this is all for