[Foreign language]
Distinguished shareholders and collaborators of OHLA. It is an honor to address you as President of this company, which is over 100 years old, in a day which is key for all of us. Today, 27th of February 2025, we are announcing that the OHLA Group is showing robust yearly results, which meet and excel all the objectives that were presented to the market just one year ago. In these figures, which we will break down later, you will see reflected not only the strength of the group, but also the commitment and the effort carried out by the over 35,000 employees of the OHLA Group.
In a year in which, on top of the day-to-day challenges, we have had to meet great challenges, the work has allowed us to move forward in a highly complex environment while maintaining our competitiveness and strengthening our OHLA brand as a key actor in the infrastructure industry. As I have already mentioned, OHLA has fared better than expected in all operating figures which measure the group's performance, and we are proud of this growth because we have achieved this while completing successfully our ambitious recapitalization, which was a key step to increase our foundations. Such a great-scale process needs planning, discipline, and a strong commitment with transparency, and today we can proudly say that we have met each of these principles. As we had committed to do with our shareholders during our extraordinary general meeting, OHLA finished the month of February, its recapitalization, and met all the agreed items.
Thanks to that, we have not only managed to strengthen our financial structure, but also to reduce our leverage ratio in over nine times in the last five years. In total, after allocating over EUR 190 million to debt cancellation and coupon payment, the OHLA Group is now entering the average levels in our industry. This is evidenced by the fact that our capital increase has allowed the company to manage to get the reference banks to liberate most of the securities in favor of the OHLA Group for over EUR 100 million. This would not have been possible without the reduction of our financial leverage. In this sense, I would like to highlight the resounding success of the capital extension that we have carried out. This is a milestone that reflects both the strong confidence of the market in OHLA and also the potential of our growth strategy.
I would like to highlight the success of the capital increase, which has been especially important both in terms of employee-exclusive shares, where we received over twice the amount of applications for share subscription, and also in the rights for our group's shareholders, where we had excess demand. This clear fact shows the support that we have both internally and externally from our shareholders, employees, and stakeholders in the roadmap of the OHLA Group. The operation has been subscribed and approved for the maximum amount of EUR 150 million, and it has allowed to incorporate new investors to the company, thus strengthening our shareholder base. This support consolidates our financial structure by giving us greater robustness and flexibility, and also strengthens our ability to carry out new strategic projects and keep growing in a market which is more and more competitive every day.
As I was saying, this result shows clear support to our vision and to the projects that we are fostering, and it also strengthens the positive perception that the market has of our ability to deal and generate long-term challenges. At this point, I would like to sincerely thank all employees of the OHLA Group who have shown vital support and commitment to the strength of this capital increase. As I mentioned before, their active participation in the employee shares plan, which they have subscribed to the maximum level available, shows both their trust in the future of the company and also highlights their commitment with the group's growth and success in the long term, and for all these reasons, I am convinced that today we are a more robust company with a financial structure which is much more optimized and has the ability to keep boosting our growth.
To conclude, the results that we are presenting today show clearly that OHLA is in the right path. I would like to reassure you that myself, as the rest of directors, and all the employees at OHLA will keep working with the same determination, commitment, and strategic vision to guarantee sustainable growth of our company. I have no doubt that our objective is to keep generating value in the long term for all our stakeholders. And now I'm going to give CEO Mr. Tomás Ruiz, who will give you a breakdown and a more profound outlook of the figures that we have achieved, advances, and next steps in our strategy. I am sure that you will appreciate the effort and the achievements that we have managed in such a significant year for the OHLA Group.
Our main challenge, once we have this financial strengthening, will be not only to keep boosting our growth, but also to improve our profitability. Thank you very much for your attention and for your continued support to OHLA Group.
[Foreign language].
Thank you, Mr. President. Good morning, everyone. It is a pleasure for me to be here with you to share OHLA's result for tax year 2024. As our president has mentioned before, the results we are going to present today show that OHLA has met and exceeded the forecasted objectives and has advanced clearly and sustainably. That shows the robustness of our strategy both in the long and the short term. It's important to highlight that these results have been achieved whilst we were recapitalizing the company, which puts even more in the spotlight these achievements. The data that we're showing today shows sustained growth in the main operating figures, which strengthens our position as a benchmark in the infrastructure industry, without a doubt. I would like to sincerely thank the members of the board for the trust and continued support. These have been essential to keep us growing successfully.
Without further ado, let me start analyzing our performance. We are showing in this graph the results of the company with a solid trajectory and an exciting future outlook. This is a company that is not only adapting to market challenges, but also overcoming them with determination and with the maximum guarantee of excellence in absolutely all their projects. This is a group that meets their word and meets their commitments. And another year, I am happy to be able to announce that OHLA has achieved and even exceeded the objectives announced to the market. The company has increased its sales, its EBITDA, and its main financial ratio. At the same time, it has generated over EUR 98 million in cash in their activity. And as the president has explained, we have achieved all of this while carrying out a very complex recapitalization and refunding operation.
As you can see on the table, OHLA achieved EUR 4.172 million sales in 2024. This is 9.8% more than forecasted and the estimates. In 2024, OHLA achieved EBITDA of EUR 152.6 million, which is 5.2% more than estimated. In the last five years, we have increased our EBITDA by 135%. In other words, we have more than doubled our results. Both figures exceed the estimates that we presented at the beginning of 2024 to the market. Allow me to say that we are especially satisfied with the evolution of our leverage ratio, which is now 2.2 x EBITDA after the end of the year and the recapitalization operation. In other words, this is nine times less compared to 2019. This is easy to say, but in the last few years, we have paid over EUR 534 million, which is about 60% of the debt the company had back in 2020.
For the first time in many years, we can say that this important performance indicator is around the average in the industry, and our objective is to decrease it even more. Don't fret, this financial discipline has been an essential pillar in our transformation and will keep accompanying our strategy in the next few years. Just a few weeks ago, as the president has mentioned, OHLA closed the group's recapitalization, which was announced to strengthen their financial structure, and the end of this process, as you can imagine, has been extremely relevant. We have met rigorously and punctually all the deadlines and commitments that were established and approved by our shareholders in the extraordinary general meeting, and we have done so with the maximum means and exceeding demand.
Now, the main milestones within the process has been as follows. We have successfully achieved a recap of EUR 150 million, which has allowed new investors to come and has also had a very positive impact in our financial robustness. We have also improved our financial leveraging, which is reaching 2.2 x EBITDA at the end of recapitalization. Also, we have reached an agreement with our financial entities, which has allowed us to free EUR 107.8 million of cash. Now, this is a turning point in the relationship with the financial entities, and it shows their trust in our company. This agreement also includes a commitment by the different entities to bring support to OHLA's operation. Also, we have extended the debt maturity till the 31st of December 2029, making the financial conditions more flexible.
Additionally, we have achieved a debt cancellation of EUR 190 million in debt, which includes the repayment of ICO credit, EUR 40 million plus interests, also the cancellation of EUR 139 million in bonds, and the payment of EUR 11.4 million regarding the coupon of September 2024. Also, we have completed the sale of our participation in the Montreal Hospital Center, CHUM, which is a non-strategic asset, and it's also part of our recapitalization. And finally, we will continue with our non-strategic asset turnover to continue in the leveraging roadmap. As a consequence of the success of our recapitalization and reducing leveraging, the price of our share price has significantly strengthened, and we have reached increases of 80%. So our market cap has increased to EUR 150 million since 2024 to more than EUR 500 million at present times. Now, regarding the operating results, we have closed 2024 with the next key figures.
Compared to 2023, there's been a 16% increase in sales, an 11.3% increase in EBITDA, and an increase of 14% in order intake. The second year, we have created an activity cash, which is a free cash flow, accounting for EUR 98.8 million. Regarding the year order intake, we have reached EUR 5.1 billion, which gives us a book-to-bill ratio of 1.2 times. With this, our total order book at 31st of December 2024 has reached EUR 9.2 billion, which accounts for 8.7% growth compared to 2023. Regarding the business cash flow generation, we have increased 60% our forecast. Collecting says the idea that this company meets its words, and as you can see, we have exceeded all the forecasts that we presented one year ago.
In this sense, we have reached an increase of 9.8% in sales regarding the forecasted sales in 2024, a growth of 5.2% in the initial EBITDA, and also a 25% increase in order intake announced by then. Regarding debt evolution, our policy to reduce debt has been our main pillars guiding the financial behavior at OHLA, achieving satisfactory results to the date. In 2020, the recourse financial debt reached EUR 749 million. Today, after our rigorous and decided management, we have made to reduce it thanks to recapitalization to EUR 332 million. In this sense, as I said before, the financial debt ratio has suffered a steady and consistent decrease, passing from 11.1 EBITDA in 2020 to 2.2 times in 2024. As I previously mentioned, in the last four years, we have paid EUR 534 million, which accounts to 60% of the balance in 2020.
At closing of 2024, the total OHLA order intake reaches EUR 9.2 billion, with Europe, one of the largest markets, accounting for 38% of the total amount, followed by the U.S. with 35.7% and Latin America with 25%. This, I'd like to highlight, that at the moment we have a healthy order book with a book-to-bill ratio above one times since 2020, which shows the good health and the positive forecast of our activity. As you can see in this slide, in 2024, OHLA has achieved the award of very important projects across the different markets they operate. Within this context, I'd like to highlight how the group is outperforming in the U.S., where we have reinforced our activity with key awards.
When we built the Correctional Center in Miami-Dade, which we announced in the month of September, we have also included in the last quarter the award of our greatest project per volume in 2024, design and construction of Southwest 10th Street Connector in Florida. I'd like to highlight that OHLA started to operate in the U.S. more than 20 years ago, participating since then in great developments and being acknowledged as the Contractor of the Year in New York and California. In Europe, the group has reinforced its presence with very important awards, especially in Nordic countries. In Sweden, the group is the greatest contractor in Stockholm Subway, and we have also included a new railway project valued at EUR 160 million. Within the Nordic countries, I'd like to highlight that the order intake has also been reinforced in Norway with an award of a tunnel in Oslo.
In Spain, new contracts due to the participation of the company in the UTE Railway Lorca. In Latin America, the project I'd like to highlight due to its size in 2024 is the Riverbank Defense in Río Cañete and in Huaura River, EUR 114.7 million. 2024 has been a key year for OHLA in terms of sustainability, and as you can see in the graph here, we have made significant progress that makes us consolidated within the sector as a benchmark. We can announce that we have committed to 85% of our sustainability plan in 2022-2024, showing what our real commitment is with a more responsible development. Also, in terms of governance, we are still committed for transparency and responsibility, and we'll link 20% of the variable remuneration-based work and management objectives to all the entities linked to ESG metrics.
Now, before presenting the goals of our group for 2025, I'd like to insist on some key variables that have the empowerment in our recent journey, and I truly believe that they explain how OHLA can bring meaningful value to our shareholders. First and foremost, I'd like to highlight the operating robustness that the group has proved with construction margins around 5% two consecutive years of positive cash flow, with a record portfolio or a record order book of more than EUR 9 billion. All of this has been achieved with very challenging conditions, and at every moment, we have complied with our commitments in the market. Secondly, I should insist on how important the recapitalization operation was, and it was closed by the group successfully in the month of February.
Thanks to this, we have a company with a healthier leverage ratio, we have strengthened our commitment with more liquidity, and we have also achieved the commitment of financial entities to renovate the different lines to the company. Thanks to this financial robustness, OHLA is a very good place to boost expansion and maintain competitiveness in an environment where markets become to be more and more dynamic. Last, I should highlight that this process has had very strong support by all the shareholders at OHLA. In this sense, in the context of this operation, the group has reached agreement with bondholders, banks, shareholders, and new investors. All of them, and with their support to this process, show the support and trust to the business plan and the future perspective business at OHLA.
This is why, in 2025, our priority, as the chairman said before in his speech, will aim to focus on improving profitability and assess the sustainable growth. For that, in the short term, we are going to implement a program to reduce our costs with a clear focus on improving our margins. We will also ensure more efficiency and profitability in our operations. Along the year, our goal is to reach a 3% growth in sales until EUR 4.3 billion, with an order book superior to EUR 4.5 billion. With this evolution, we aim to have an increase of 14.7% on EBITDA, reaching EUR 175 million. All these measures not only will contribute to strengthening our position, but it will also improve the revenues, the net revenues, boosting better management of our resources and increase of profitability in our operations.
In 2025, we also forecast an improvement in our credit rating as a direct result of the solid progress that we've made and the results that we are sharing today. We are aware that with a clear focus on profitability, efficiency, and solid growth, OHLA is the correct path to face the upcoming challenges. Thank you very much for your attention, and now we are going to pass to the Q&A session. With me, we will have Don José María Sagardoy, CFO, and I will hand over the floor to Don Pedro Arellano, Investors and Market Capital Relations Manager. Thank you for your attention.
Muchas gracias, Luis. Thank you very much, Luis. Thank you, Tomás. Just a reminder that questions are being sent through the webcast, and please do ask any questions you might have.
I have written down a few, but I will try to read and answer as many as possible and read them out to Tomás and José María Sagardoy. So just to reiterate our commitment and thanks to all the people who are here today, and just to highlight what they have already said during their presentations, this is a company that meets its word, that meets its objectives, and we are consolidating in that regard, and we have paid over EUR 534 million of debt in the last few years. It's an honor to keep making history in this centennial company. Okay, so without further ado, let's have a look at the questions that we have received. There's a person who has asked quite a few questions, and I have seen I will call them later because I see that some of the figures that they have written are not correct.
We have the financial statements for December, the presentation, and all the information that you've seen have been published already in our results report. Page 11, you can see all the investments, cash flow generation, and so on. This list is a bit of a mixture of everything, but just to highlight, investments have been EUR 16 million, as we have announced. The divestments include CHUM. OWO is the last thing that we did at the beginning of the year, and capital extension at the beginning of the year. That's what makes out the figure that you will see in that page. Then Tomás is asking a few questions about divestments. Can we give an update? What do we expect and when for?
Yes, absolutely.
As we have announced, the company keeps on the strategy of non-strategic asset turnover, and our key objective is to keep decreasing our leverage ratio, but we also have a second objective, which is to keep investment in more profitable projects. To date, we have two assets on sale. One is our interest in the Canalejas Project, which is an iconic project in Madrid, but which is not part of OHLA's strategic assets. And the second one is the service division, which is also for sale. The processes will keep on going, although this recapitalization, successful recapitalization, will allow us to keep on working on these processes in a very serious manner, but without rush, so we don't have to undersell our assets. This is something that is not going to happen.
Okay, so following up on the divestment question, there are quite a few people. Let me just show the slide, the objective slide, because quite a few people, as I was saying, have asked about objectives. So talking about the evolution of Canalejas and why we have adjusted the price of Canalejas in our results this year.
Well, in that regard, what I would say is a two-sided answer. On the one hand, we have the assets, which is composed by the hotel, the gallery, and the parking lot. And this is an asset that is growing successfully and has very solid and rigorous sales. The results are very satisfactory as well. However, and I think this is normal with this kind of asset, our interest in that asset is reviewed every year, and it's adjusted to the book valuations that we have available. And this is why we have adjusted the value of our interest this year. I would like to highlight that this is a book adjustment and has had no effect on our cash flow.
Okay, thank you, Tomás. We have one new question, which is also related to many of the other questions that we have had before. This is to do with mediation awards. Just to remind you that the unaudited financial statements, there's been an update on these material awards as well. There have been no material changes. But Tomás, José María, we are being asked on our opinion on Sidra and another awards.
Just on the mediation awards and any other litigation processes that we currently have, we have different processes to present claims in different projects in different places. Some of these claims have resulted in litigation, and we have mixed results. Sometimes results are favorable, and sometimes they are negative for a company.
But other than the normal, let's say, litigation inventory, I would highlight Sidra. In the case of Sidra, this is a hospital in Qatar. And as we have said a few times, our estimate is not modified. And the main variables that we need to take into account are the fact that the hospital or the project of the hospital was finished by 95%, and this is something that the mediation tribunal has already awarded. And this was EUR 1.8 billion. And we think the remaining 5% that still needs to be constructed would be around EUR 90 and EUR 100 million. Also, just would like to remind you that we have had guarantees for the UTE or the joint venture that we created for the construction of that hospital, and that amounted to EUR 230 million.
Also, we have won litigations against subcontractors for the execution of guarantees for around EUR 80 million, of which EUR 40 million are already in the UTE accounts, and the other EUR 40 million, although we have won in first instance, are now going to be going to the Appellate Tribunal. So now this concerning guarantees. Now, concerning the EUR 80 million reserves that we have for any potential awards, we think it's provisioned adequately, and we're ready for any kind of resolution in this litigation process. However, and just to conclude, we have big litigations as well, like [PES] in Qatar. We have the Doha Metro, for which we're expecting a positive result in the short term, possibly before the one for Sidra, and possibly in 2025.
And we think it's going to be a favorable result because the tribunal has already determined that the contract was terminated by the client in an illegal fashion. Okay? So we are just waiting to see liquidated damages for that project.
Thank you, Tomás. Just going over the list of questions, they were asking about different litigations. We have no news, and the news that we have been published this morning in the non-audited financial statements. Okay? Now, concerning operating levels, we are being asked whether there's going to be an issue with awards in the last few years, whether construction is going well in all the projects. And they're also asking whether we have analyzed internally the rebuilding of Ukraine or whether this is still early stages.
In that regard, I would say that in our current order book, we don't see any material risk in any contract other than the normal risks in this kind of operations, yeah, construction operations. In terms of awards, they are ongoing. We have materialized a few of them in more time than expected for technical reasons because sometimes we didn't have permits or we didn't have administrative authorizations. Everything is ongoing, everything is going well, and we don't expect any material issues. They're also asking, also in terms of operations for the future of the company, we would like to say once again that what we have announced today is what we publish to the market in November 2024 and all the information that we've given concerning the recapitalization and the roadmap of the group. We are being asked about service evolution.
This is something that is included in the results report in the annual accounts.
There's another question concerning whether there's going to be dividend distribution in the next two years or when you're expecting to do that.
Okay, so I think in terms of services, the results have been published, and we had an EBITDA of EUR 10.5 million this year. Last year was EUR 11 million. So as it happens in many other service companies, service providers, we are facing normal challenges in terms of contracts with the public administrations and with the increase of the official minimum wage and increase of wages in general. But other than that, we are working to keep improving the results of this division, which, as we have already mentioned, is on sale. Now, what was the second question, sorry? Oh, dividend distribution.
Okay, well, if we talk about net profit, I think the first thing that we need to highlight is that the measures that we want to implement in the short term are focusing on improving our margins, and the idea is to achieve greater profitability in our company. We have reached a turning point with the recapitalization, which improved significantly, as we have said a few times, our leverage ratio, and we're now hoping to use three different levers to increase profitability in the short term. First of all, launching a cost reduction plan immediately, and the idea behind this is to simplify our organizational structure. Secondly, second lever, we have already mentioned, non-strategic asset turnover, and the idea behind this is to reinvest in other award and development projects or in our main business.
The third lever would be to keep on developing investment business, which will be award and real estate developments. The combination of these three levers will no doubt bring greater margins to our business. Indeed, these investment projects ensure greater construction margins, and in this way, we will keep trying to achieve better profitability. Also, we are regulating financial expenses. And we are, unfortunately, there's no microphone, so we cannot hear properly.
Also, could you give your opinion on the reconstruction of Ukraine?
As you know, we have an important operation going on in the Czech Republic, which is close to Ukraine. We have talked to different representatives, especially with the Ukrainian embassy, about the possibility of moving forward, but we don't have a specific project. I think indeed it's early stages.
Some questions concerning the business plan and very specifically on the euro value of the activities that we have on sale. Once again, this is included in the results report that we have published this morning on page 10 of the results report. It's Canalejas, and the one for services is in the financial statements. They're asking whether you have any figures or objectives in terms of leverage ratio where you think the company will be happy and comfortable to focus on operating growth exclusively.
I think as the president has said, we have reached levels which are, shall we say, normal in the industry in terms of leverage ratio. One of my main objectives will be to keep improving this. I think under twice EBITDA should be our goal in the midterm.
There's a question that has been asked lots of times, which is to do with the Kuwait litigation. As you have said, the updates are in the unaudited financial statements this morning, and we didn't see anything different from what we have been saying this year, right?
Yes, exactly. In the case of Kuwait, as we said, we executed guarantees for EUR 39 million to the UTE. This is an execution which we think is extremely abusive, and this is why we had preventative measures in place to prevent it from going forward, and then the government of Kuwait applied for the elimination of those measures, and we won that. We had an appeal. We won that appeal, and it's going to be resolved in the near future, but I would like to say that the execution of guarantees is illegal and it's abusive.
If this were executed in the end, we would have a credit that would allow us to fight the termination of the contract. Also, it's important to highlight that the result would not be affected by this decision because we had already taken into account the potential losses that we would get from this in our results.
Some questions regarding the recapitalization with the agreement of new investors. After the new capital extension, there was a possibility to have access to liquidity and new sources of funding in the company at what level? They wanted to know if any progress has been made and if there's any piece of news. Is there any lock-up from new investors in order to stay at the?
Regarding the first question, the board has agreed to deep dive with the independent matter experts to analyze the issues of a convertible bond that may be up to EUR 50 million. But this is something that is still under analysis. Regarding the second question and regarding the shareholders in the company, in the agreements in order to increase the financial support across different financial entities, there is a long-term commitment. Let me just highlight here that we are not just talking about new investors, but also the greater shareholders in the company in order to give some stability to the business plan. Another question. Has the litigation or the debt that Grupo Villar Mir should pay to OHLA, EUR 13 million, this is what remains to be paid, apparently.
This is an old litigation that has been addressed at different stages, and there is a balance to be covered amounting to EUR 11 million and another one which amounts to EUR 22 million. The very first one is, well, some actions have been already implemented in order to pay for that. The other one is still not eligible because it is subject to certain conditions, but we will do our best and anything we can in order to collect it. Let me just say that this is a non-recourse debt, and we need to see what is the guarantee that we obtain from all these two tranches, which is what the board said before. There's no recourse against the Grupo Villar Mir.
There's a pending question made by analysts. The EUR 98.8 million cash flow is due to the activity itself or the capital increase?
Let me just say that the answer is no. It is explained on page 11. The business activity is 98.8%. This is just created by the business, excluding capital increase, expansions, and sales. And is it comparable to last year, or do we aim to maintain this level to the upcoming years? Well, it's comparable because last year we had a similar range, even though there were some extraordinary matters. But the goal of our company is to maintain this cash flow creation and even improve it if possible.
Okay, thank you.
Pedro, I believe it's important that whenever we see the cash evolution in the upcoming year, I think nobody should be surprised about the numbers saying that because it affects EUR 100 million after excluding taxes and interests and everything. And please remember the effort we have made on debt repayment, and we have to pay till 2029.
We have a new question. This is a recurrent question. Have we thought about selling the company, and we truly believe that Pacadar is a company that brings value?
Well, Pacadar is positively evolving with EUR 12 million EBITDA per year, generating cash flow and order intake. So by the moment, it is not expected to be on sale. And we've never thought about this, really. This is an asset that comes from the very first refinancing process because this is when we did the in-payment action. But this is an asset that the company has never thought about selling, really. And as Thomas said before, the Pacadar progress is very positive in EBITDA and in net profit.
Another question. In the development activity, do we aim to build public housing in Spain? I think this question is focusing on the shifting towards a different change in housing.
Before talking about the different developments that we are going to do, the growth on concessions and different housing developments need to be done progressively with special care to the cash in the company and the financial strength of our company. Having said this, we don't have business expected for this specific business area. Some other projects in Spain will go along with the housing sector.
Another question. The enforcement of corporate governance with new investors, the relationship is being nice. What are the roles that benefit these new investors when joining the company?
I think the company has been positively affected by new investors, the shareholders, but also at the board where the different points of view come together and where they have a very enriched strategic perspective.
Another question is, is it ever going to be listed in the U.S. or is it ever going to be listed?
Well, this is not a possibility in the short term. This is something that we are considering, but it's not in our roadmap at the moment.
Could we give any detail about the Canalejas project sale, which has been confidential? I believe that we cannot give any detail about the interests or not. If someone else was interested in this, we have already talked about the evolution, the sale, which is an asset for sale. We have 50%. I don't know if you want to add something else on this.
Well, nothing else to say. Some potential buyers showed an interest on this asset at different price levels.
This asset that we have 50% participation, but we have other partners there, which are necessary to consider for any sale process. In this specific case, we didn't reach to any point regarding the sale itself.
No more questions. That's everything unless I've made any mistake. If there's any missing, sorry, in advance, but these are all the questions that we received. Let me just say that from the investor relationship department, we are at your disposal to address any question you may have. I think it's the moment to conclude. Thank you for your time. Key messages again, we are a trustworthy company that meets its words. We have reduced the leverage ratio by two times, very far below what we ascended some years ago, and we are on the right track. Thank you for your time.