Good afternoon, everybody, and welcome to Ferrovial'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 e-mail. If you have any questions, you may ask them through the form included in the webcast or via e-mail to ir@ferrovial.com throughout this conference call. Your questions and who they are from will be read during the Q&A session at the end. With this, I will hand over to Mr. Rafael del Pino, Ferrovial Chairman, who will be leading this conference call. Rafael, the floor is yours.

Thank you. Good afternoon, and thank you for attending the 2019 results presentation conference call. I'm joined here today by Mr. Ignacio Madridejos, our CEO; Ernesto Lopez Mozo, our CFO; and the CFOs of each of our business divisions. We will take a closer look at the strategic update and 2020 expectations at the end of this presentation. But in terms of our results, 2019 has been another strong year operationally with especially solid performance of our infrastructure assets. Our Texas Managed Lanes have performed well above expectations, supported by the growth of the 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 NTE 35 West, which is still in its second year of operation. 407ETR has maintained its robust results, while at the same time remaining in customers' good graces 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 agree that toll road costs are offset by time savings. For this 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 million passengers traveling through the airport in what has been the ninth consecutive year of traffic growth. This has been achieved while service standards remaining at top levels. And finally, we have received a new Managed Lane that was signed late August, the NTE 35 West Segment 3C, a northbound extension of NTE 35 West, which goes straight through the heart of the Dallas-Fort Worth logistics hub and office parks area and which make this our largest Managed Lane in the region. There were also positive news…

Thank you, Rafael, and now I will 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%, supported by a higher contribution from 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 million last year. As Rafael mentioned before, mature asset rotation is a key part of our strategy. As such, in 2019, we closed the sale of Ausol. We sold 65% of the equity for €451 million and signed a call and put option for the remaining 50% stake to be exercised in the next 3 years. The sale has implied net capital gains of €474 million. We also sold 11.75% of Ruta Del Cacao in Colombia for €28.6 million with a net capital gain of € million. Our Texas Managed Lanes had the first debt refinancing and dividend after 5 years of operation. Last December, we completed the refinancing of the NTE debt, some $1.3 billion. The new debt structure would reduce the average cost of debt and extend debt maturity. If we compare deal to maturities, the cost of debt has fallen from 5.47% to 3.8% by 167 basis points. Also NTE paid its first dividend to shareholders above our initial expectations, thanks to the strong performance of the asset. NTE paid $292 million to its shareholders, of which €166 million were received by Ferrovial. We expect the refinancing of LBJ 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…

Thank you, Ignacio. Good afternoon, good morning. Okay, so I'll take care of the lines below the operating performance, starting with disposals and impairments. And here, we have the main item is the capital gain from the sale of Ausol that reached €475 million. It's important to see, as Ignacio mentioned before, the appetite from investors 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 Autema. You know that we carry this out every year, just pending the dispute in terms of the changes, unilateral changes to the concessions that were made in the past and we are claiming compensation. In terms of other items, including there, we also have the Ruta del Cacao disposal. If we move to the financial results, starting with the infrastructure projects, financial expenses, we see a figure of -- an expense of €263 million and basically the increase vis-à-vis €218 million is on the back of having a full year of NTE 35 West opened, also the start of operations on I-77 and the NTE refinancing with the expense of the initial fees of the original financing. Okay. This was done with very competitive rates. If we look at the ex infrastructure project level, we see an income of €69 million. So it's a better result than last year and is basically on the back of hedges, equity swaps for performance-year plans for employees and management. Okay. If we move to the equity-accounted results, here, we have the growth, the positive impact of the 407ETR and also Heathrow and AGS. In Heathrow, you see €106 million, and this is helped by the improved on the operational -- improvement on the operational…

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 asset's strong performance. The strong performance of NTE led to Ferrovial receiving €166 million from the Managed Lane. The strong appetite for high-quality mature assets in the market has led to evaluation of Ausol 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 ninth year of consecutive growth whilst maintaining excellent service standards. And finally, an improved net cash position ex infrastructure assets of €1.6 billion, not including the proceeds from the agreed sale of Broadspectrum. 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 24 strategy. The application of this strategy will already start seeing results in 2020. We expect the strong performance of our infrastructure assets as well as the first dividend from LBJ 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 billion, of which €10 billion are in toll roads, mostly in U.S. 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. We'll be working on this process during 2020 and expect that project to be awarded at the beginning of 2021. Construction…

So the first question comes from Elodie Rall from JPMorgan. A question on Heathrow. What is your view on the likelihood of the new runway to be approved? And if not, what would be the consequence for Ferrovial?

Thanks, Begonia. Well, we already covered that 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 ANPS ruling, I mean the lack of compliance with the Paris Agreement on climate change, Heathrow's management has a strong view that it can be sorted out. Of course, 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 RAB. We will have an impact of writing them down from an accounting point of view of €100 million at the end of 2019.

Also from Elodie. 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 health of our employees and about all the people related to us. 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 only issue will be something related to the airports. However, as was commented yesterday during the Heathrow's results presentation, the reference that they are using is the one from the SARS outbreak in 2003. At that time, the traffic was down 2.8%. Of course, we are following all the protocols defined by the Health Department in the U.K. And we follow the situation very closely. So it's something that -- see how the situation is evolving, but the only reference that we have so far is that related to the outbreak in 2003 with SARS, and as I mentioned, the effect in traffic, but nothing more for the time being, and we'll comment next time with the first quarter results.

And lastly, also from Elodie, a follow-up on Heathrow. Do you see a risk of lower dividends?

Okay. Heathrow, also answered that question in the management presentation. I mean with the base case, they don't see 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 headroom in all their financial parameters. So I mean we don't see that at this point in time.

The next question comes from Daniel Gandoy from JB Capital. Would it be reasonable to annualize the first quarter 2020 dividend for the 407ETR 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 dividend in the 407 is a decision by the Board, not that it is taken every quarter. And that's based on the performance of the 407, mainly related to the EBITDA and operating cash flow. Of course, we extrapolate the EBITDA -- the dividend of the first quarter to the full year, it will be a 19% increase. And as you know, in the last years, we have had an increase of EBITDA, but the decision will be taken every quarter, and we have to wait till the performance in the following quarters to confirm that it will be the same dividend for the year.

The next set of questions come from Stephanie D'Ath from RBC. Could you please update us on the 407ETR potential stake increase?

Well, there are no news. And the hearing, I think, will be in April, I think, it's 19th of April, 16th of April, yes. So after that, it will take probably a few months to get a decision. So it will be by midyear, probably.

Could you please update us on the timing of the Services disposal?

Well, as commented several times, fully committed 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 that, to sell geographically, the Services division is ongoing. We cannot commit on any specific date, and we'll announce as soon as we have news of any specific agreement to sell any of the parts.

Can you please comment on the dividend expectations from the U.S. Managed Lanes for 2020?

We don't give a forecast of the dividends. The only thing that we gave during the Horizon 24 plan was €3.3 billion dividend coming from the Toll Roads. That is, I think, the only guidance that we have done.

Yes. And also from some, a couple of years ago or 3 years ago, there was the business plan published, it's a little bit old. That is the only guidance out there, and the operational performance is better. So we hope to beat that.

Can you please give us the time line on the Maryland project tender?

Yes, I think the tender, the RFQ, it will start in April. I think after that, we will go, I mean the basis of how the project is going to be launched, I think, it's going to be July, if I remember well. I think that the bidding process will be in February, and the closing will be mid next year. And also I think what, we will see more information on how the process is going to be exactly defined in summer and probably the bidding selected in around February or March next year, and the closing in mid next year. So still more than a year ahead for this project.

The next question comes from Guillermo Fernandez-Gao from Kepler Cheuvreux. Any color on how the traffic has begun in January, February in the 407ETR?

Well, I think, it's to too early to give any guidance about how is going to be the traffic in the year in the 407. Of course, there are many factors. The economy is performing well in the area. Of course, there may be some price elasticity. It's 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, no? The last year were negative. We'll see how it looks this year. We have also 1 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 get more information about that.

Also from Guillermo, any particular asset that you consider mature and a candidate to rotation in 2020?

About that, as commented previously, of course, we are analyzing any opportunity that we may have to rotate mature assets. Still, we have not taken any decision about that.

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 initial review could be sorted out, and they are willing to have the government to sort this out.

The next question comes from Nicolas Mora from Morgan Stanley. Can we discuss the soft traffic in our 407ETR 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?

Yes. I think about the traffic last year, I commented during my presentation that it was a negative effect because of weather. And as commented, it was a negative effect. Without that effect, it would have been 0.7% positive. We have always, as usual, we have some positives and negatives during the year. Of course, the economic growth is a positive, the elasticity was a negative. I think the area is growing well. Also construction in the 401 is, you may have some positive effects at some point of time. When it is sold, then we have the other way around, the negative effect because of the finalization of that type of job. I think that, in general, we don't disclose information about the type of traffic or segment. I think we consider this commercial relevant information. But as commented, usually, we use as much as we can all this information in order to, first, give the best service to our customers, so they can have out, have the traffic flow, that is adequate speed in the 407 corridor and also to maximize the revenues. So based on that, we take the decisions. And based on that, we define the price increase for the following years. In terms of the schedule 22 payments, also it's something that is part of the same equation. First is, it's not a long-term effect because it has an initial theoretical evolution of the traffic at some point of time, reach the cap that was expected for the 407. So I think that after a few years, we will not see any effect from schedule 22 payments because we'll be above that threshold, and then 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 evolution of the traffic. But of course, we consider that as part of the equation of the, first, looking at the customers and making sure that we have an adequate traffic flow in the 407, but also looking at the revenues and also looking at additional increasing costs that could come from these schedule 22 payments. So I think it's part of the equation. The 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 specific days. And I think that it's not very easy, 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 increase in revenues because, as we commented previously, price elasticity and the price increase and customer will be considered whenever we try to maximize the revenues.

On the Texas Managed Lanes, can we talk about truck traffic? And can you help us understand the penetration levels between NTE 35 West and LBJ? And what was the step-up in number of days when traffic was above the maximum threshold to switch to free pricing at NTE over 2019?

As you know, we don't give information about trucks in our Managed Lanes. 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 that. About reaching the cap, we did in the NTE during the last year in several locations, and also in the 35 West, in one of the segments, we've reached the cap in the month of December, and we will expect that that may be the case during this year, especially when we approach to the summer months in which the traffic is more intense.

The next question comes from [Stanislas Coupere] from Lazard. What kind of leeway do you feel you have for a further price increase at U.S. Managed Lanes and at the 407 ETR?

Well, I think that, of course, I mean you have to take your own assumptions, but what are the variables that we are taking in order to increase prices. We look to make sure that, first, there is a traffic flow at a certain speed in our Managed Lanes and the 407. We can have a more dynamic pricing in the Managed Lanes in order to make sure that there is not congestion at a time. And as you know, also the 35 West is lagging behind because of its ramping up still compared to the LBJ and NTE. Also as you know, 77 is starting dynamic prices just in December. So I think it's ramping up. Of course, it will be based on the traffic, its pricing dynamics in the information that we have. And based on that, we will take the decisions. So it's very difficult to anticipate how this will evolve because it will depend on the traffic. But as commented, we see a very strong economy. We see Dallas-Fort Worth that is growing very strongly. So I think that we feel comfortable with our pricing dynamics and how we'll apply that in the future. You will see in next quarters how this price is evolving. In the case of the 407, as you know, there are, I think, two increases announced and one decrease during the year, again, to take advantage of the seasonal and the traffic that you have more traffic during the summer months. And again, we try to maximize customer service and at the same time more revenues. So that's why we have our first increase in February that has taken place already, a second one that will happen during the summer months and then a reduction later on during the winter. It has already been announced and you have that information.

The next question comes from Marcin Wojtal from Bank of America. Would you consider divesting your stake in Heathrow if capacity expansion was definitely not to go ahead?

I think that Heathrow is, under any scenario, attractive -- a very attractive asset. It's a very good infra asset, as commented, excellent customer service, rated as one of the best in the world. And as commented several times, we expect anyhow to have some CapEx in the following year so that will be attractive. Still the third runway, I think that -- we are still thinking they will appeal, and we have good options that it will happen. It's -- my opinion is very well needed for a global U.K. I think it will also fulfill with all these environmental concerns and being carbon-neutral. So I think that there is no reason not to happen because it fulfills all the requirements needed for growth, economic growth in the U.K. and also to be a global hub, taking the present that has been -- taken today, that has today. So for us, we consider still that is a strategic relevant asset that could generate value under any scenario.

Also from Marcin, would you consider divesting other mature assets such as the AGS airports?

Well, we are not considering that. I think this is, we don't see that as a mature asset yet. I think it still, in spite of the lack of traffic growth last year, I think it still has a potential in the future, and we are not considering to sell the AGS airports.

And lastly, from Marcin, do you expect to have any material restructuring expenses in 2020 related to the implementation of the cost savings plan?

Yes, there could be some costs. I mean we are finalizing the assessment. I mean we're talking about close to maybe €30 million, something like that. But this is a preliminary figure. We'll update the market when we have the final assessment.

The next question comes from Robert Crimes from Insight. Can you comment on the slowdown year-on-year average tolls per transaction in the Managed Lanes in the fourth quarter, especially the 3% in LBJ?

Well, the LBJ 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 to that. And therefore, we didn't have such an uplift. But of course, with traffic conditions changing and the cap evolving, this could change in the future.

The next question comes also from Nicolas Mora from Morgan Stanley. When do you expect to pay out the provisions on U.S. contracts and the other contracts over 2020, 2021?

Yes. Most of the, these provisions, the cash-out will happen. As you know, this is coming mainly from 3 construction projects, the I-77, the Atlanta project, the I-66. The I-77, as you know, is almost is finished, already the construction. But the I-66 will happen during the next 2 years, same as Atlanta. So we'll see that provision that is, especially during this year 2020, but also we'll see part of it in 2021.

Also from Nicolas, 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 million.

The next question comes from Jose Manuel Arroyas from Santander. What is the recurrence of the schedule 22 payments in the 407ETR? We learned that 407ETR was under the second congestion payment in the fourth quarter in 2019 by, we assume, about C$2 million. Do we have guidance for 2020?

You know Jose, as mentioned, this schedule 22 payments, that is the way we call it, they are calculated after the end of the year and paid in April. It 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 a long time ago. So 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 because it will depend on the traffic in certain specific days how much it will be. So I think that still, we need, we'll need some time 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 further payments because we'll reach the threshold that has been defined. The number still is not fully defined. And as you know, it's a payment to the state that will be done, I think, in April.

Regarding previous question, sorry, I did the slide the 1 year all the shareholders. So instead of '21 through '23, the injection on the I-66 is from 2020 through 2022. And if we translate the dollars into euros, it is just around €625 million.

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 a strong close to the year in cash. Infrastructure is performing. And we thought, as you know, we decide each year, and we thought it had the merit to propose an increase for this year's remuneration.

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 give them. We have not disclosed that kind of information. It's 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 work sometimes is only at night and it's not during the day. So it might in some places start later and will finish sooner. So I think it's very difficult to anticipate how it will affect the traffic. And also of course, it depends also on other factors. But it's clear that after 2024, we'll see an improvement in the same way we have seen during 2019 in the traffic because we are increasingly improving the connection between the different Managed Lanes, and I think that traffic will flow much better after all these improvements.

Do you have any interest in ADP in France, should the privatization process restart?

It's, 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 stake if they decide to do so in order to analyze if it's interesting for us or not.

The next question comes from Bruno Silva from BPI. In the fourth quarter working capital evolution, how much was due to prepayment? And out of these, if any, how much were related to own group concessions?

Okay. In -- the total of the year was really €130 million. And most of that was in the fourth quarter. I won't differentiate between the group companies and external because all this is done on an arm's length basis. So there's no point on differentiating. So €130 million is the number for the year.

And also from Bruno. Is the NTE EBITDA estimate of $146 million published in the concession zone budget for 2020 aligned with Ferrovial's own budget?

We don't disclose that information.

There is one further question, which should be arriving, please hold. So the last question comes from Charles Maynadier from Kempen. Could you please give more granularity on the 2020 construction EBIT margin expectations per division, that is Budimex, Webber and Agroman?

No, we don't disclose that information. 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 today.