Earnings Call: Q4 2017

Feb 28, 2018

Good afternoon, everybody, and welcome to Ferrovial's conference call to discuss 2017 financial results. The results report and the presentation are available to you both in our website and at the Spanish Stock Exchange. If you have any questions, you may ask them through an email to ir@ferrovial.com or at the Q&A session at the end of this call. With this, I will hand over to Mr. Rafael del Pino, Ferrovial Chairman, who will be leading this conference call. Thank you, Ricardo. Good afternoon, and thank you for attending the 2017 full year results presentation. I am joined here today by Íñigo Meirás, our CEO, Ernesto López Mozo, CFO, and the CEOs and CFOs of each of our business divisions. We have four points in the highlights. One is Ferrovial has closed a year of excellent growth of our infrastructure assets. The second is that we have had solid cash generation and the financial position of the ex infrastructure project level is good. Despite that, and the third one is that the share price has underperformed versus our peers. The fourth is that we are working on improving the relative performance of the share price looking forward. Talking about the growth on our infrastructure assets, traffic has increased across the board. EBITDA has reached double-digit growth in our main toll roads. In 407 ETR, we are 12% over last year's. NTE has grown 32.6%, and LBJ has grown 37.4%. We have also had higher dividend distribution from our main assets. We have received EUR 553 million thanks to strong operating performance and inflation evolution. Of these, EUR 262 million come from 407. That means an increase of 7.6% as compared with 2016. EUR 153 million come from Heathrow. That means EUR 57 million more than 2016. The regional airports, more than double the 2016 dividend, reaching EUR 84 million in 2017. Talking about cash generation, we have closed 2017 with an excellent operating cash flow generation, EUR 999 million before taxes. Activity cash flow has reached EUR 781 million after EUR 102 million of net investment and EUR 115 million of tax payments, which has enabled a payout to shareholders of EUR 520 million. Net cash position of EUR 1.3 billion, including EUR 500 million of hybrid bond issuance. Excluding the hybrid bond, the net cash will have reached EUR 841 million, still above the EUR 697 million posted last year. Despite that, the share price has underperformed our peers. We are aware of this underperformance in the last two years, and this evolution is mostly explained by weaker contracting business, mainly in U.K. Services and in Construction. Other factors affecting markets such as higher interest rates and inflation, driven by economic growth, should be welcome. Our main assets become even more valuable to clients. As we have seen in 2017, they show higher cash flow generation from higher traffic and higher propensity to pay. As I said at the beginning, we are working on improving the relative performance of the share price, concentrating on a focus on mitigating risks in contracting, allocating most of our capital on new infrastructure projects, mainly in the U.S., with a growing pipeline and leveraging on our strong footprint there, improving the value of our infrastructure assets. And because most of our value is equity consolidated, we are also providing some extra disclosure of the main assets reported in this line. After this brief overview, let me hand over the call to Íñigo Meirás, who will discuss the operating performance of our business units. Íñigo? Thank you, Rafael, and good evening to everyone. Let us start with toll roads. The divisions showed solid financial results, like-for-like terms, revenue up by 15.7% and EBITDA by 23.8%, on the back of the higher contribution from managed lanes in the U.S., traffic growth in the majority of assets, and the collection of success fees, which arrived to EUR 19 million in the year. A strong dividend, Ferrovial received EUR 277 million, although lower than 2016, EUR 290 million, mainly given to the extraordinary dividend was received from the Portuguese toll roads in 2016. In September 2017, Cintra acquired 6.3% in NTE and an extra 3.6% in LBJ, and now holds almost 63% in NTE and almost 55% in LBJ. The total amount paid by Cintra for the stakes was $107 million. Mature asset rotation. The sale of Norte Litoral was completed in April 2017, and Algarve Road in September 2017, both contributing to EBITDA with four and nine months, respectively. Since the date of the transaction completion, both assets began to be consolidated by equity method. Managed lanes, the excellent EBITDA growth from both assets, NTE by almost 33% and LBJ by 37%, with Q4 2017 showing the highest quarterly EBITDA for these assets. A strong traffic performance, NTE 10.6% and LBJ 10%, with heavy vehicles outperforming. Heavy vehicles and NTE up by 16% and on LBJ by 18.5%. There is significant room for higher tariff increases, mostly at NTE. On 407, traffic growth was 2.6% up in the year. Much better than expected, despite a difficult comparison in second half of 2017, and in the second half of 2016, the 407 East first extension was toll free. 2018 tariffs for 407 ETR were announced 9% up on average in January, but will be applied from 1st of February. Finally, I would like to show you a slide from the latest customer satisfaction survey. This chart reflects the high value for the money perceived from 407 ETR drivers. Customer satisfaction remains very high, and we feel that we have room for improvement in the coming years. Jumping now to airports. We showed a very positive performance in 2017. At Heathrow, traffic was yet another record year in terms of passenger traffic, 3.1% up versus 2016. Passenger reaches a record breaking of 78 million. Intercontinental traffic was the key driver of growth, increasing by 3.6%, with load factors improving significantly. The highest passenger growth came from Delta Air Lines, almost 19% in the year, Turkish Airlines 11%, and Emirates almost 10%. A strong financial performance with EBITDA up by 4.6%, reflecting greater cost control, which has helped to reduce operating cost per passenger by 3.1%. A strong retail growth up by 7.7%. Higher than expected dividends, operating performance, and higher inflation have boosted dividend distribution in 2017. Total payout to shareholders of GBP 525 versus GBP 325 million in 2016. GBP 150 million above expectations as an extraordinary payment at the end of the year. As for the non-regulated U.K. airports, AGS, traffic was up by 4.9% versus 2016, and the positive performance shows on all the airports, highlighting Glasgow, the most relevant, whose traffic grew by 5.7%. Aberdeen increased by 1.9%, and Southampton traffic went up by 6.1%. The strong EBITDA growth primarily due to a 6.3% increase in revenue. EBITDA evolution since acquisition is up by 35%. AGS paid out GBP 146 million at 100%, of which GBP 75 million from outstanding dividend following the refinancing. In total, Ferrovial has received EUR 237 million versus EUR 134 million in 2016 from our airports assets. Additionally, I would like to highlight that in August 2017, the concession led by Ferrovial Airports signed a contract for the redesign and retail operations of the main terminal at the Denver International Airport for 34 years. Denver Airport is the sixth busiest airport in the U.S. by passenger traffic, reaching in 2017 an all-time record for passenger traffic, reaching 61 million passengers. Services, higher revenue, 16.3%, following the integration of Broadspectrum. 12 months contribution in 2017, EUR 2.5 billion versus seven months in 2016, offsetting the negative impact from the sterling evolution. EBITDA increased by 30%, 14% in comparable terms, with profitability at 6%, which implies an improvement versus 2016, was 5.4%. Order book at almost EUR 21 billion, fell by 11% like-for-like versus December 2016, mainly given a more strict project selection process in the U.K. An operating cash flow generation of EUR 396 million in the year. Looking at the different geographies where our services division is present, the performance reflects the different dynamics of each market. In the U.K., a slight decrease in revenues 2.7% like-for-like down, and a significant improvement on profitability, EBITDA margin 3.5% versus 1.5% in 2016, in line with the guidance provided to the market 3%-4%, helped by the restructuring process undertaken in mid-2016. The environment remains tough, with clients under budgetary pressure and several competitors missing forecast. For 2018, we expect the EBITDA margin, excluding any impact from Birmingham, to be between 2%-3% due to the completion of several contracts in consulting. A longer time to negotiate the exit of some non-performing contracts. At the same time, the investment scope of the Birmingham contract has to be reassessed after the Birmingham City Council won the appeal against the previous judicial decision that had ruled in Amey's favor. We will update the market in the coming months. Broadspectrum is consolidated since May 2016, 12 months contribution in 2017 versus seven months in 2016. The contribution in 2017, excluding the activity in the Americas, reaches EUR 2.2 billion. Activities in the Americas, U.S., and Chile, are reported under International Services and have contributed EUR 306 million in revenues. Following the conference call of Broadspectrum we held last Monday, we are not going to go into further detail for this activity in this call. In Spain, showed a solid performance. Revenues up by 7.7%, helped by the acquisition of contracts with private clients, which contributed 5% of total sales. EBITDA margin stood at 10.4%. Finally, as for the Construction results, revenue were up by 11% like-for-like terms, with positive performance in all the areas. International revenue represented 83% with relevant weight of our main markets, Poland 32% and North America 30%. Lower profitability, EBIT margin 3.5% versus 7.5% in 2016, due to major projects in the initial phase. Lower profitability in order book on the back of lower levels of complexity, and losses incurred in 2017, mainly explained by two contracts in Scotland and in Colombia. Lower proportion of contract with sister company is the last concept to mention here. Budimex shows a 17.7% EBITDA growth increase due to the settlement of finalizing infrastructure contracts. The construction order book figure hit a new record, up by 26.7% in comparable terms following the financial close of I-66, Denver, and Grand Parkway. All these three projects in the U.S. The last quarter of last year's performance is more or less in line with expected performance in the coming quarters. Early development of big projects and tight margins with advanced production will continue in the first quarters of 2018, but margins are expected to improve at the end of the year. EBIT margins should evolve from around 1% in the first quarter toward 3%-3.5% for the full year. With this review of the divisional and operational figures, I will hand the call over to Ernesto, our CFO, who will run through our financial results. Thank you. Thank you, Íñigo. Now I will start reviewing on page 15, the lines below depreciation, starting with impairment and disposals. Here we have a positive line of EUR 81 million, and this comes from the divestments of Norte Litoral, EUR 48 million, and Algarve, EUR 42 million mainly. In terms of financial expenses, we see that there's a lower expense this year, and this is thanks to a perimeter that doesn't include toll roads like Chicago Skyway that was affecting last year's performance. So we have lower interest expense from that component. In terms of the equity accounted results, here is where we see the degree of performance that we are getting from the 407 ETR and from Heathrow, mainly. They have excellent operational and financial performance, and Heathrow is helped as well by positive impact from derivatives. In terms of taxes, we have a EUR 71 million charge. It is close to the statutory tax rate. It would have been a little bit higher with the statutory tax rate, something like EUR 88 million expense. We have a positive impact from changes in tax law that affected past taxes. In particular, the effect of the lower tax rate in the U.S. So that is a positive of EUR 17 million that helps to get an expense of EUR 71 million. In terms of minorities, we see a higher expense compared to other years. This is based on the good performance of Budimex, and also we had less minorities from divestments in 2016. All in all, we get a net profit that is EUR 454 million, up from last year. We move to next slide. We can look into the cash flow generation. Here we see the operating cash flow ex-infra, reaching, as mentioned in the introduction, close to EUR 1 billion before tax. This is helped by higher dividends from Heathrow. The increase was EUR 153 million our share compared to, sorry, EUR 153 million higher. The 407 ETR was 7.6% higher, and it reached EUR 268 million. AGS, EUR 84 million, more than double the dividend that we got in 2016. There was a balanced contribution, as you can see in the slide, from the different divisions. Dividends from the infrastructure and also the cash flow from services and construction. Services generated 38% of total operating cash flow, reaching 396. This was held by Spain with lower days of collection and also Broadspectrum, beating the expectations of cash generation. The U.K. generated EUR 49 million, and this was above the number of last year. Finally, construction contributed 13% of the total operating cash flow with EUR 134 million. We move to the next slide. We can see the evolution of the net debt, and in particular, the working capital performance. As we discussed in previous meetings, the working capital improved dramatically in the last quarter of the year, and therefore, in the full year, it is only a reduction of EUR 13 million in cash from working capital. Then we have, as I mentioned before, the dividends from toll roads and projects, the EBITDA, and we have the investment cash flow in recurring business, and then the divestments reaching EUR 253 million. All in all, also, if we take into account the hybrid bond reissue, we reach a position of EUR 1.34 billion at the end of the year. If we strip the impact of the hybrid bond that is consolidated as equity, even taking that out, we reach a net cash position of EUR 864 million. That is higher than the closing number for 2016. So, a good performance on the back of a solid quarter and excellent dividends from infrastructure. Also, we have a line for the infrastructure project evolution, and here we see the different investments that have been taking place. In the end, we have a similar number to last year, 4.8 billion versus 4.96, also helped by the debt denominated in dollars in America that is translated into euros at a lower rate. So moving to the next slide in the presentation, we touch on the IFRS 15 impact. We decided to anticipate the application of this accounting policy, and basically that has meant an adjustment of EUR 272 million in our reserves. This comes mainly related to the U.K., to business in the Services division. Basically, the concepts that are taken into account here are different performance obligations. This is typical in a PFI, where you have an investment phase and then a maintenance phase. Basically, you have to separate both instances now. That means that all the CapEx phase has to be adjusted, and then you recognize revenue later on. Then, of course, you have the requirement to have highly probable not to be reversed in terms of revenues regarding achieving milestones. That is another of the components where we took some adjustments. That is the last part of what I wanted to share with you at this point in time, and I hand it back to Rafael for the concluding remarks. Thank you, Ernesto. As you probably have read in the results release, the board today has approved to propose to the AGM a scrip dividend and share buyback, very similar to last year's. As I said before also, we are working to improve the relative performance of our share price, mainly through mitigating risks in contracting, optimizing the value of our infrastructure assets, which keeps increasing, as do the dividends. NTE will pay its first dividend in 2019, and LBJ, we expect to do so in 2020. We are allocating our capital investment on infrastructure projects, mainly in the U.S., where the pipeline is growing, and we have a strong base. Thank you very much for your time today, and we now open the floor for any questions you may have. Good afternoon, ladies and gentlemen. The Q&A session starts now. If you wish to ask a question, please press 01 on your telephone keypad. Thank you. The first question comes from Guy Mackenzie from Credit Suisse. Please go ahead. Hi. Good evening. Thanks for taking my questions. I have three of them. Firstly, maybe just to focus on the U.K. Services business. If I recall, in the 9 months, Amey's margins improved quite significantly compared with last year. Your current guidance is for some further deterioration relative to what you reported today in 2018. I am just wondering if you can give us a little bit more detail on what is happening there. I am wondering to what extent you are being impacted by the liquidation of Carillion and taking on some of those contracts, for example. Maybe more towards the medium term in terms of the current competitive environment for new contracts that you are signing there, whether the liquidation of that asset has alleviated any of that competitive pressure at all. I guess I am just looking towards whether you expect much of a recovery in 2019. Secondly, in construction, those contracts that you mentioned in Scotland and Colombia, which have had a bit of an impact. Just wondering if you can say when those roll off, and how much confidence you have as well that for construction 2018 will be the trough. Thirdly, on the infrastructure dividend, the 7.5% growth in dividends from 407 ETR is ahead of, I think, the 5% that you were previously guiding to, and across the board, your dividends have grown by a little bit more than expected. With that in mind, and with the fact that NTE and LBJ will start paying dividends, as you said, over the next couple of years, I am just wondering if you can give us a clearer picture on when the dividends paid to Ferrovial shareholders might be covered by those dividends received from your infrastructure assets. Thanks very much. Okay. This is Santiago Olivares, CEO of Ferrovial Services, and I will take the first question that has to do about the services business in the U.K. and the medium-term prospects, and also the guidance. Well, clearly the economic context in the U.K. remains challenging, and although we are making good progress, and I think that the company will keep improving, there are two main reasons that could affect the profitability in 2018, and therefore we are being more cautious. One of them is that there are some consulting contracts that normally attract higher margins that come to an end, and those revenues could be compensated by other rail business, but clearly lower margins. So there is a mixed element here. The second reason is that there are a couple of loss-making contracts that we expected to exit in 2017, but are taking a little bit longer than we thought, and those will be exited in 2018 but could have an impact on profitability. So those are the reasons for the guidance that we gave. Then talking about your other comments, Carillion. Carillion is not any particular resource that is affecting us in this element. There could be some additional business coming to us, but if we get any additional business from Carillion, it is not going to deteriorate the profitability, and we will only take those contracts that are beneficial for the company. In terms of your medium-term question, again, the context is difficult, but we are making progress. We are improving the control processes. We are being very selective. As we move ahead, the profitability will keep improving over time. Because clearly the competitive pressure, I don't think is not going to increase because some competitors are having difficult times, and they will also be more cautious in bidding going forward. Good afternoon. This is Alejandro de la Joya from Ferrovial Agroman, the construction division. Regarding these two projects that have been mentioned during the conference, the project near Scotland and the other project in Colombia, both of them have been already finished. Colombia is a project that finished in 2013, so already five years ago. The M8 was handed over to the client last year. We do not expect any losses in 2018 or following years. So those two projects should be already finished. Regarding the margins in construction, as Íñigo Meirás, our CEO, has already mentioned, the EBIT at the beginning of the year in the first quarter should be around 1%, but that margin should be increasing throughout the year in the way that the full year will come out with a 3%-3.5% EBIT. Okay. Hi, guys. This is Ernesto. The last question regarding when dividends from infrastructure could cover our dividends to shareholders, the final ones in Ferrovial. In 2019, you know that we are expecting the dividend from NTE, the first dividend from the managed lanes. If we take into account that there's no draining cash from the contracting business in 2019, with that, it should be okay. But always, we should bear in mind that if opportunities arise for investment, we're going to look at them. All these good opportunities that happen in the U.S. or maybe expansion in airports as well in the U.K. should take place later on. But we always want to have the option if attractive investment comes to be there. But in terms of just the pure number, 2019 would be the year. Okay, thanks very much. Can I just ask a very quick follow-up on U.K. services? We've seen a pretty sharp decline in the order book there. Should we expect that to continue over the course of 2018? Is that business shrinking a little bit, just given the nature of that market? In which case it might have a sort of smaller overall impact on results going forward. Just wondering what the strategy is there. Well, clearly the decline in order book is something that has been expected because we are being more selective in the bidding opportunities and only taking those contracts that has a better profitability and are right level of risk. That is not a surprise for us, and it's not a concern also. So we will keep being selective, but it is also important to say that the normal evolution of the order book in the U.K., especially in the utility sector, is that you get the contracts at the beginning of the regulatory cycle, then the order book decline until the new regulatory period starts, and then you have another spike in order book. That will come between 2019 and 2020. There are some cycles in the order book in our business, but in terms of the decrease, it is not something that we are especially concerned, and we will keep being selective in the new bidding opportunities. Okay, that is clear. Thanks very much. Thank you very much. The next question comes from Guillermo Fernandez Gao from Deutsche Bank. Please go ahead. Good evening, everyone, and thanks for taking my question. I have just one, and it is on the evolution of the working capital. If I remember correctly, it has improved in Q4 by as much as EUR 635 million, or around that. If you could, Ernesto, probably provide some more color on where it has come from and if it has to do mainly with advanced payments from the just signed contracts, the ones you just have reached financial closing. Hi, Guillermo. Well, basically that is one of the components, but it is evenly distributed among the different things that we said could happen and have happened. One of them is, yes, advanced payments in these important contracts is around EUR 140 million. But then you have additional dividends from Heathrow and you have much better cash performance, the seasonal one that usually happens all across the board in Poland and also in the U.K. So it is evenly distributed, as I mentioned, and the advanced payments is EUR 142. Thank you. Thank you very much. The next question comes from Thomas Mandernay from Kempen. Please go ahead. Good afternoon, gentlemen. Thomas. Actually, three questions from my side. Let us start with capital allocation. It would be great if you give a bit more light and elaborate on the timing of your hybrid bond issue, despite the fact that you ended the year net cash. Also, given that you got the higher dividends from your infrastructure assets, your dividend to shareholders declined year on year. Do you need to save that cash for acquisitions, or could you have. Also, given the fact that you highlighted in the call that you want to close the relative underperformance versus peers, what I am trying to say is, are you considering to provide more clarity on your dividend policy, and be a bit more transparent there? Secondly, could you decide, going forward with the investment opportunities, to instead of take minority stakes, also take majority stakes in infrastructure assets to avoid the more complex accounting, and basically have the assets on balance sheet, and dilute the movements in EBITDA and EBIT from your contracting divisions? Lastly, could you explain why your operating cash flow for your construction division declined by more than EUR 100 million year-on-year? Is the decline in dividends in other toll roads only related to asset sales, or is there another reason behind that? Could you say again the last part, please? We missed that. Sorry. On the operating cash flow that you generated this year, the 99, your construction division operating cash flow declined by more than EUR 100 million year-over-year. Could you explain the reason behind that? Is the decline in the dividends from other toll roads, so excluding 407 ETR, only related to asset sales or is there another reason behind that? Okay. Thanks. Let me address some of them. The first one regarding the timing of the hybrid. Well, we thought that the market was changing. From a timing perspective, it was the right time to get this kind of product that yields 2 and 1/8, and it is kind of deeply subordinated. It helps, since we see a lot of opportunities that could materialize, in particular in the U.S. and in infrastructure, we see a lot of demand maybe for more private initiative to have a capital structure that could help to do that. Actually, if we were to issue now, we would be issuing at much worse terms. I think that the timing was right, and we are looking to prospects that are quite interesting. Other questions, I will take the last one, and the last one is regarding the operating cash flow generation and in terms of our level of participation, that is the second question, in the different infrastructure consortia. I will pass that on to Íñigo that will address that. In terms of the operating cash flow, you were asking about construction, why it is lower. Well, we have talked about some losses in some contracts. Well, actually, they were cash out. So these contracts have implied on the tune of EUR 100 million of cash out. So that affected the performance of the cash evolution in construction. Regarding the dividend on toll roads that you were asking about, the Portuguese toll roads, well, we sold them, and then prior to the sale, yes, we had a dividend, now we have a lower participation. We have divested them. It just has to do with that. But the prospects for all the infrastructure as it grows is that we should be seeing better dividends going forward. Now let me hand it to Íñigo. Hi. Regarding the second part of the first question, which is related to the dividend policy at the holding level. I have to say as last year and the year before, the decision taken by the board of directors in terms of the dividend guidelines for the time being, is that we do not provide that guidelines to the market. The only news today is that we already took a decision at the board of directors level for this year to pay the same dividend as last year. But with the idea not to provide guidelines for the time being. In terms of our strategy regarding the capital allocation of our approach to the projects on minority stake basis, as you know, last year, we took advantage in two projects in the LBJ and NTE, and we did not have any problem to increase our exposure to these two assets, NTE and LBJ. In terms of the future, I think that in considering the current pipeline, our idea is to bid for projects, big projects, and mostly in the U.S. on the basis to keep at least a 50% stake in all the projects. But it depends project by project. We need to address and to discuss with other financial investors if at the end, we are taking more than 50% or not. But what is clear in our strategy is to take at least 50% stake. Cool, thanks. Thank you very much. The next question comes from Bruno Silva from CaixaBank. Please go ahead. I have a few questions for clarification, if you do not mind. The first one related with your guidance for 2018 in construction. Those margins, are they in any way affected or impacted by expected provision reversals, or is completely clean from that? Take the opportunity to ask how much specific provisions in construction are in the balance sheet. The second question is just to understand if the IFRS 15 has any impact at all in the guided margins that you offered us today. Then, if you do not mind, another confirmation. In the net cash ex infra, is it in any way impacted, aside from the hybrid, impacted by any transfer from the infra project scope? I think that is all. Thank you very much. Okay, Bruno. Let me start with the last one. Maybe we will ask you to rephrase some of them, but I mean, starting with the last one regarding the net cash ex infrastructure, the transfer from the infrastructure perimeter is very easy. We get dividends, that helps. We invest, that diminishes the net cash position. There is nothing different from that. We covered basically both components in the slides and speech. Regarding the IFRS 15, if it affects the guidance for 2018. Well, clearly IFRS 15 slows any recognition of revenues. Therefore, you should see the whole sector in the U.K. having that sort of a slower revenue recognition that we think is fine. So, yeah, in that regard, it has some impact. We are not quantifying it. Then the other question was regarding provisions in construction. Could you rephrase that, please? Yes. If the guidance you are providing for 2018 in terms of margins is impacted in any way by further provision reversals. How much specific provisions do you still have in the balance sheet associated with the construction unit? Okay. We don't provide the exact number of provisions we have, even though if you look into accounts, you have different parts where you have a lot of description on that. Regarding the timing, of course, when works are finalized, you could see some reversals of provisions. At the same time, we are very prudent when we start works. You should start seeing them. The net effect on that, we are not basically providing a way for that guidance. That guidance reflects, as Íñigo said, the fact that production now is in very early stages on the big projects, and the rest that is under advanced production is less profitable, let's say. That's the reason why we see this evolution and why we expect at the end of the year to have a better performance. We'll start producing better margin. Okay. Thank you. Thank you very much. The next question comes from Stephanie Dath from RBC. Please go ahead. Yes. Hi, good evening. My first question is on your cash generation. It is currently about half from your infrastructure assets and half from your contracting assets. Could you please elaborate a little bit on where you see that mix going forward, especially given how focused you are in acquiring infrastructure assets in the U.S.? Regarding dividends from your main infrastructure assets for 407 ETR and Heathrow, could you maybe give us a bit more insight on where you see the payout going for those? Thank you. Well, Stephanie, thanks for the questions. Basically, the main message we want to give is that there is, of course, this improvement from infrastructure, but we want to invest in opportunities that we see are coming of the type of infrastructure we like. We want to keep that flexibility. If opportunities arise, we will invest there. So it is difficult to give the mix because maybe these dividends are reinvested, with a focus, of course, on value creation. We have not provided that in the past because we want to retain flexibility, and that is the same situation now. I am sorry. Thank you very much. The next question comes from Victor Carelli from Santander. Please go ahead. Yes. Good evening, gentlemen. Just a couple of questions on my side. The first one is related to the expected EBITDA margin in Services in Amey. Okay, because you have 2%-3% EBITDA margin guidance, ex Birmingham. I have understood that there is something going on there. Amey lost at the second stage of the courts process. So which would be an eventual impact of Birmingham on this margin, if any, in 2018? The second question is related to the Construction. You are guiding for 1% in first quarter and 3.5% for the full year. Assuming that Budimex should be above the rest, it means that Ferrovial Agroman International is really below the guidance still, or which is the mix of this EBIT margin for 2018? If I may, if you can give us some details about the Grand Parkway project in Texas, some financials that could impact in 2018 and going forward. Thank you. Okay. I will take first the question about guidance in the U.K. services and the impact of Birmingham. The reason we wanted to give that separated is to give more visibility and more clarity, and this is what we will do going forward. Clearly, the dispute with Birmingham is a long-running dispute, and we won in the High Court, but now the Court of Appeal has found in favor of Birmingham. In any case, we feel like the provision that we have in the balance sheet should be enough to execute this resolution of the Court of Appeal. In any case, we are analyzing all our options, including a potential appeal to the Supreme Court. I think that will continue. In any case, as you know, we received the judgment just last week. As part of the resolution, part of that judgment, we have to discuss with the council, with Birmingham City Council, the best way to execute that resolution. We are in the process of doing that. I think it is early to evaluate the impact, and I think we will be in a better position to give you more color in the Q1 results presentation. It means that the EBITDA margin may be lower in 2018, in the worst-case scenario, I would say. Yeah. As I said, we have the level of provisions that we have in the balance sheet is enough to cover the resolution in the long run. The potential ups and downs in the timing in the short or medium term is something that we cannot evaluate just now. You have to bear with us and wait to have more visibility on that element. This is Íñigo Meirás speaking, and regarding the second question on Ferrovial Agroman guidelines, mostly specific on the first quarter of 2018. I think that the main reason for the margins of first quarter is winter. The winter, as you can imagine, is worse in north of Europe and in south or in Texas. There are different combinations of different effect, but the most important is winter. The first quarter is always the worst in terms of margins in the construction sector, depending where you are, but in our case, and is the case for Budimex. After winter, I think that you will see that the EBIT margin will improve during the second, third, and fourth quarter of the year. Thank you very much. The next question comes from Marcin Wojtal from Bank of America. Please go ahead. Yes. Good evening. The first question is on your exposure to Canada. Obviously, you receive substantial dividends, but considering the recent depreciation of the Canadian dollar, can you remind us what is your FX hedging policy, i.e., are you protected in terms of the dividends for 2018 from that recent depreciation? Number two, last year, there was a Capital Markets Day on the toll roads division, where you published your valuation for the assets. Is there going to be an update of that valuation at some point in 2018? Hi, Marcin. I will take the first one. Yes, dividends for this year are hedged. Of course, the mark-to-market of those hedges was updated with the close of the year level, right? From the close of the year level, we are protected. This devaluation now is hedged. Now I pass it on to Enrique for the update on the Cintra Capital Markets Day. This is Enrique Díaz-Rato speaking, and the answer is yes, we will be providing with an update of our models by April. All right. Thank you. The next question comes from Victor Acitores from Société Générale. Please go ahead. Hi. Good evening. I have two questions. One is on slide 11. That is when you speak about the dividends from Heathrow, the underlying dividends EUR 375. Taking that the statement of Heathrow is not so clear, can you provide us any potential guidance of growth for 2018? This is the first question. And the second, if I may, Ernesto, is that only on slide 16 on the operating cash flows of construction, taking that you mentioned that the Scotland and Colombia losses is behind us, we can expect operating cash flows to improve significantly in 2018, despite having the same proxy of heavy margins? Thank you. Okay, Victor. First regarding Heathrow, we do not provide guidance other than what Heathrow provides. The only thing is that, of course, inflation keeps delivering the asset, and that helps, and the financial performance is very good. But that is all I can share with you at the moment. With Heathrow, we will be seeing how we can show to the market how the dividend could evolve. Regarding the cash flow in construction, it will be more reflective of the margins we are showing, right? We cannot provide more detail now. If there is any specific events like the ones we had this year with advanced payments, we would share it with you, but at the moment, we are not providing any further information. Sorry for that. Thank you. Thank you. Ladies and gentlemen, just a reminder, in order to ask a question, please press 01 on your telephone keypad. Thank you. Ladies and gentlemen, there are no further questions in the call. I now give back the floor to the company. Thank you. Well, thank you very much, everybody, for your attention, and see you in the next conference call at the first quarter results. Thank you.