January - December 2012 results


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Ferrovial 2012 results presentation

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January - December 2012 results

  1. 1. January - December 2012Results MOTORWAYS SERVICES CONSTRUCTION AIRPORTS INDEX GENERAL OVERVIEWGENERAL OVERVIEW ....................................1 CASH GENERATION Cash generation .......................................1 Operating cash flow, excluding infrastructure projects, increased by 78% to EUR909mn (vs. EUR510mn in Business performance ...............................1 Financings ...............................................1 2011).MOTORWAYS ...............................................2 This significant increase was thanks to higher dividends received from the 407ETR (EUR198mn vs. Traffic performance ..................................2 EUR133mn), the start of dividend distribution by Heathrow Airport Holdings (HAH) (EUR143mn) and Other important matters ...........................3 Contract awards .......................................3 strong cash flow from the Services division (an all-time high of EUR491mn), three times the figure for the Tenders ...................................................3 previous year (EUR164mn). 407-ETR ..................................................4SERVICES ....................................................5 This strong cash generation was supported by the strength of demand at the principal infrastructure Businesses in Spain ..................................5 assets. Both Heathrow (LHR) and the 407ETR motorway closed the year with all-time highs for traffic, in AMEY ......................................................5 spite of significant increases in tariffs (LHR +12.7%, 407ETR +8.5%). Backlog ...................................................5CONSTRUCTION ...........................................6 16.34% of HAH was divested in 2012 (10.62% sold to Qatar Holding and 5.72% to CIC International), for Backlog ...................................................6 a total EUR894mn. Markets ...................................................6 Budimex ..................................................6 Thanks to the strong cash generation and the disposals, the net cash position ex infrastructures (NCP) Webber ...................................................6 improved for the sixth consecutive year, to EUR1,489mn (vs. EUR906mn in 2011). Other markets ..........................................6AIRPORTS ...................................................7 This improvement in the NCP was after dividend distribution of EUR832mn (EUR367mn in 2011). Traffic performance ..................................7 Tariffs .....................................................7 Income statement ....................................8 BUSINESS PERFORMANCE Regulatory matters ...................................8 Revenues for the period reached EUR7,686mn with EBITDA of EUR927mn, up 13%. Net debt ..................................................9 At the Motorways division, there were signs of recovery in the USA after a prolonged period of declining Bond issues and refinancings .....................9 Dividends ................................................9 traffic, especially as regards heavy traffic. In Europe, the tariff increases partially made up for the Disposals .................................................9 reduced traffic.CONSOLIDATED INCOME STATEMENT ......... 10BALANCE SHEET AND OTHER MAGNITUDES . 12 The Services division proved to be particularly resilient, with positive revenue growth (+4.6%), thanks to Consolidated net debt ............................. 13 the expansion in the UK. The Construction division saw a persistence of the trends of previous years: Corporate credit rating ............................ 13 deteriorating domestic activity offset by growth internationally, especially in the USA. Corporate bond issuance ......................... 13Consolidated Cash Flow ............................... 14 Services division won significant long-term contracts (Sheffield), as did Motorways, where a consortium in Cash Flow Excluding Infrastructure Projects which Cintra has a stake was awarded the East Extension of the 407ETR motorway, while the highlight ............................................................ 15 Cash Flow for Infrastructure Projects ........ 16 for the Construction division was winning the contract for the US460 motorway in Virginia (USA).APPENDIX I: SIGNIFICANT EVENTS ............. 17 Events after the close ............................. 18APPENDIX II: PRINCIPAL CONTRACT AWARDS FINANCINGS................................................................ 19 In 2012, the 407ETR issued two long-term bonds for CAD600mn, which enabled the company toAPPENDIX III: EXCHANGE-RATE MOVEMENTS refinance its 2014 maturities ahead of time. In April, it issued a CAD400mn bond with a 4.19% coupon................................................................ 20 maturing in 2042. In September, it issued a CAD200mn bond with a 3.98% coupon maturing in 2052. InComparable information: Income statement analysis in like-for-like 2012, HAH issued bonds for a total of more than GBP3,000mn as part of its long-term capital marketsterms responds to the need to have an accurate picture of theperformance of the underlying business. The principal adjustments financing strategy, including an inaugural Swiss franc issue and another in Canadian dollars, together withmade to achieve this comparable analysis is the elimination of fair-value adjustments (hedging, impairments and asset revaluations), various private placements. After the year-end, Ferrovial successfully placed a five-year EUR500mn issueExchange-rate movements and changes to the consolidationperimeter. with an annual coupon of 3.375%, its first issue of corporate bonds, for which requests were received for*EBIT more than EUR5,590mn. The proceeds have been applied to the early repayment of corporate debt.For the purposes of analysis, all the comments referring to EBITare before impairments and disposals of fixed assets Dec-12 Dec-11 Chg. (%) LfL (%) Dec-12 Dec-11 Chg. (%) Revenues 7,686.4 7,445.8 3.2 0.9 Construction Backlog 8,699 9,997 -13.0 EBITDA 926.8 817.2 13.4 11.2 Services Backlog 12,784 12,425 2.9 EBIT* 708.0 625.2 13.2 10.6 Net result 709.7 1,242.5 -42.9 n.s. Traffic Dec-12 Dec-11 Chg. (%) Capex 579.8 936.0 -38.1 ETR 407 (VKT´ 000) 2,340,004 2,325,517 0.6 Chicago Skyway (ADT) 42,228 42,066 0.4 Indiana Toll Road (ADT) 27,459 27,142 1.2 Autema (ADT) 15,056 19,114 -21.2 Dec-12 Dec-11 Chg. (mn) Ausol I (ADT) 12,537 14,254 -12.0 Net financial Debt -5,105.5 -5,170.9 65 Ausol II (ADT) 14,099 15,576 -9.5 Net Debt Ex-Infrastructure Projects 1,489.2 906.6 583 Heathrow (million pax.) 70.0 69.4 0.9 1
  2. 2. Results January-December 2012 times has become even more evident in recent quarters due to theMOTORWAYS economic uncertainty in Spain, the loss of purchasing power due to the austerity measures introduced by the government, and rising unemployment. Like for Dec-12 Dec-11 Chg (%) In addition to all the above, VAT increased from 18% to 21% on 1 Like (%) Revenues 381.4 389.7 -2.1 -3.1 September, which was reflected in a 2.5% increase in the tolls paid by EBITDA 271.6 283.2 -4.1 -5.1 motorists. EBITDA Margin 71.2% 72.7% Other particular circumstances which had an impact on toll motorway EBIT 204.4 230.5 -11.3 -12.2 traffic in Spain were as follows: EBIT Margin 53.6% 59.1% At Ausol, the toll increase (+7.5%) that came into effect on 29 July, driven by the cancellation of a compensation account approved in 1999 toPerformance in 2012 at the revenue and EBITDA levels was mainly offset the tariff cuts at the time, and the opening to traffic of the Sanaffected by the administration’s failure to pay the compensation accounts Pedro de Alcántara tunnel on 26 June, both had a negative impact onof the R4 and Ocaña-La Roda motorways in Spain (EUR23mn in 2011), motorway traffic.the reversal of VAT-related provisions (EUR20mn) at Autema and fallingtraffic, partially affected by tariff increases. The Azores motorway started At Autema, the new tariff regime that came into effect in Januaryoperations in December 2011, with the consequent positive impact on the eliminated the subsidy to local users of the Sant Cugat-Terrassa sectionconsolidation perimeter in 2012, which was also increased by the SH-130 and introduced new frequent-user discounts on that section for ‘green’in Texas opening to traffic on 11 November 2012. vehicles and multi-occupancy vehicles on the whole motorway. This motorway has a compensation mechanism that guarantees its operatingTRAFFIC PERFORMANCE result, established in 1999. The other European motorways were also affected by the sharp increaseIn Spain, traffic in all the corridors continued to decline, with an in fuel prices (which were at all-time highs in Portugal and Ireland).appreciable drop in the fourth quarter. This weakness was due to the In Portugal, modifications to the Norte Litoral concession contractdeterioration in the economy and the rise in the price of fuel. eliminate the traffic risk, and the Algarve motorway contract is in theThe decline in traffic in the corridors was exacerbated by a continuous process of modification along the same lines.loss of traffic density share on the part of the toll motorways, for two Ireland: There was a slight fall-off in traffic on the M4 and M3 due to thefundamental reasons. First, the cumulative decline in vehicle use since deterioration in the economic situation and the increase in fuel prices. Onthe beginning of the economic crisis has considerably reduced congestion a positive note, there was an improvement in heavy traffic, thanks to aon non-toll roads. Second, the reluctance to pay tolls in recessionary continuous increase in traffic density share in the corridors. Traffic (IMD) Revenues EBITDA EBITDA Margin Chg.Full consolidation Dec-12 Dec-11 Chg. Dec-12 Dec-11 Chg. Dec-12 Dec-11 Chg. Dec-12 Dec-11 (pbs)Chicago Skyway 42,228 42,066 0.4% 55.0 49.0 12.3% 47.6 41.7 14.0% 86.5% 85.2% 132SH-130 6,201 1.8 n.s. 1.0 0.4 n.s. 53.7%Ausol I 12,537 14,254 -12.0%Ausol II 14,099 15,576 -9.5%Ausol 48.5 53.4 -9.2% 36.6 40.4 -9.4% 75.5% 75.6% -13Autema* 15,056 19,114 -21.2% 84.0 81.7 2.8% 92.2 68.4 34.7% 109.7% 83.7% 2,597Radial 4 5,588 6,796 -17.8% 14.7 30.9 -52.3% 4.2 21.8 -80.9% 28.2% 70.6% -4,235Ocaña-La Roda 3,191 3,822 -16.5% 13.5 24.2 -44.0% 5.7 16.9 -66.1% 42.3% 69.9% -2,761M4 25,306 25,759 -1.8% 21.3 21.4 -0.7% 14.5 14.6 -0.5% 68.1% 67.9% 15M3* 25,528 25,935 -1.6% 20.4 35.7 -42.8% 15.1 29.7 -49.2% 73.9% 83.2% -934Euroscut Algarve 39.2 34.9 12.3% 34.4 29.8 15.7% 87.9% 85.3% 256Euroscut Norte Litoral* 40.3 44.1 -8.7% 34.0 39.4 -13.7% 84.4% 89.2% -488Azores 8,186 8,174 n.s. 21.1 0.9 n.s. 17.1 0.7 n.s. 81.1% 71.2% n.s.Holding & Others 21.6 13.5 n.s. -30.7 -20.5 n.s.Total 381.4 389.7 -2.1% 271.6 283.2 -4.1% 71.2% 72.7% -145 Chg.Equity consolidated Dec-12 Dec-11 Chg. Dec-12 Dec-11 Chg. Dec-12 Dec-11 Chg. Dec-12 Dec-11 (pbs)407 ETR (VKT) 2,340,004 2,325,517 0.6% 569.2 489.6 16.3% 471.6 401.7 17.4% 82.9% 82.0% 82Indiana Toll Road 27,459 27,142 1.2% 151.9 133.3 13.9% 123.0 109.1 12.8% 81.0% 81.8% -79Ionian Roads 29,223 34,442 -15.2% 57.9 66.2 -12.6% 15.9 37.6 -57.5% 27.6% 56.8% n.s.* Financial assets 2
  3. 3. Results January-December 2012North America: Q1 Q2 Q3 Q4 OCAÑA - LA RODA 2011 -6.5% -5.5% -7.6% -6.2% Chicago Skyway The Ocaña-La Roda toll motorway filed for creditor protection on 19 2012 -0.7% +1.1% +0.4% +0.7% October 2012. On 4 December the courts accepted the request. 2011 -1.6% -3.8% -4.1% -1.0% Indiana Toll Road Ferrovial’s investment in this project is provisioned in full. As of the 2012 1.9% 2.6% -0.5% 1.3% outcome of the creditor protection process, there is not expected to be any negative impact whatsoever on Ferrovial’s accounts.Traffic on the US toll motorways continued to improve, supported by the The net debt associated with this asset amounts to EUR529mn.modest growth in economic activity and lower fuel prices. The creditor protection filing triggered the early expiration of theIndiana Toll Road: this motorway keeps the positive pattern of growth, financing contract, which matured on 31 December 2012.after the completion of the improvement and widening works and theincrease in the speed limit from 55mph to 70mph on one section. The INDIANA TOLL ROAD TARIFF INCREASEScompletion of these roadworks produced a particularly significant increase The new tariffs came into effect on 1 July. These implied 7.7% and 2.7%in heavy vehicle traffic. increases in the tolls for light vehicles not using a transponder on aChicago Skyway: the 0.7% growth in the fourth quarter was the third standard journey the full length of the motorway on the open and closedconsecutive quarter of growth after a prolonged period in decline, which sections respectively. The increases for heavy vehicles were 1.5% for thestarted in 2009. The growth in heavy traffic was particularly notable, and open section and 3.9% for the closed section.as a reflection of the completion of improvement works on the contiguousIndiana Toll Road. DIFFERENTIATION BETWEEN FINANCIAL AND INTANGIBLE ASSETSThe SH-130 opened to traffic on 24 October, and tolls were first levied on11 November. The first few weeks in operation were affected by various In the application of IFRIC 12, concession contracts can be classified asone-off events that had an extraordinary impact on traffic, such as the either intangible or financial assets. Contracts treated as financial assetsFormula 1 Gran Prix, which increased traffic by 40% over the weekend of are those than include some revenue guarantee mechanism, and wherethe race, or the inclusion of the motorway in Google Maps’ route network, there is thus no traffic risk. In the case of Cintra, the concessions treatedwhich led to a 14% increase in traffic compared with the previous weeks. as financial assets are the following: Autema, Norte Litoral and the M-3.Motorway traffic density was highest on the days before a public holiday, In the case of the North Litoral, the classification as a financial asset issuch that the celebration of Thanksgiving on a Wednesday resulted in the due to changes in the terms of the contract from shadow tolls tohighest density to date. availability payments.OTHER IMPORTANT MATTERS CONTRACT AWARDS RADIAL 4 Canada: 407 East Extension (availability payment) (Cintra 50%). Total investment in the project of CAD1,100mn.On 14 September, the Board of Directors of the Radial 4 toll motorway Spain: Almanzora freeway (between Purchena and Huercal-Overa) (Cintraapproved a request to the courts for creditor protection, and this was 16.25%). The concession contract was signed on 15 March. Availabilitygranted on 4 October. payment, 30-year concession with a total investment in the project ofThe Radial 4 project was directly affected by exogenous factors approximately EUR145mn.(substantially lower than expected traffic, higher than expected A-66 (Benavente – Zamora) (Cintra 20%). The concession contract wasexpropriation costs, economic recession, etc.) which under the present signed on 14 December. Availability payment, 30-year concession with aconditions have prevented the concession from being able to meet total investment in the project of approximately EUR192mn for thevarious payments for expropriation and commitments to financial construction.institutions. An important factor when taking this decision was that thepotential supports for the concession envisaged in the legislation were not Cintra acted as financial advisor to the US460 project, which was awardedeffectively implemented by the contracting body. In the light of all the to a consortium led by Ferrovial Agromán (Ferrovial 70%) on 9 Octoberabove, the Board took the above-mentioned decision – which was also 2012. The commercial and financing close was on 20 December 2012.legally binding - in the confidence that a solution would be reached withinthe next few months. TENDERSThe investment relating to this project is fully provisioned. As of the In spite of the uncertainty in the markets, there has been a slightoutcome of the creditor protection process, there is not expected to be recovery in the development activities of public authorities in some ofany negative impact whatsoever on Ferrovial’s accounts. Ferrovial’s international target markets.The net debt associated with this asset amounts to EUR580mn. In North America, Ferrovial is evaluating various different projects inAs a result of filing for creditor protection, the stand-still agreements with various States, and in Europe, the company is working on variousthe lending banks were terminated. projects. The company is also studying projects in other markets such as Australia and Latin America. 3
  4. 4. Results January-December 2012407-ETR reflecting the correlation with the economic recovery in the Province of Ontario. CAD Dec-12 Dec-11 Chg (%) NET DEBT Revenues 734.0 675.0 8.7 407ETR closed the financial year with a net debt position of CAD5,219mn. EBITDA 608.2 553.8 9.8 The company has no significant debt maturities until 2015 (CAD500mn). EBITDA Margin 82.9% 82.0% EBIT 547.6 495.4 10.5 DEBT ISSUANCE EBIT Margin 74.6% 73.4% 407ETR’s latest bond issue (CAD200mn with a 3.98% coupon, maturing Financial results -300.1 -318.8 5.9 in 2052) was on 6 September. In April 2012 it issued CAD400mn, with a EBT 247.5 176.6 40.2 4.19% coupon and maturing in April 2042, thus refinancing its 2014 Corporate income tax -70.3 -43.7 -60.6 maturity ahead of time. Net Income 177.2 132.9 33.4 Net Income attributable 76.6 57.4 33.4 CREDIT RATINGS to Ferrovial Contribution to S&P: "A" (Senior debt), "A-" (Junior debt) and "BBB" (Subordinated debt). Ferrovial equity 46.0 30.5 51.0 accounted result (€) DBRS: "A" (Senior debt), "A low" (Junior debt) and "BBB" (SubordinatedN.B: since Ferrovial’s disposal of 10% in 2010, the motorway has been consolidated by the equity debt).method, as a reflection of the percentage controlled by Ferrovial (43%).The 407ETR saw significant revenue and EBITDA growth of 8.7% and 407ETR TARIFFS9.8% respectively in local currency terms. This positive performancereflects the combination of tariff increases on 1 February and traffic The following table shows the comparison between the 2011 and 2012performance. The average revenue per journey increased by 8.5% vs. tariffs (which came into effect on 1 February).2011.407ETR contributed EUR46mn to Ferrovial’s equity-accounted results, CAD 2012 2011after the annual amortization of the goodwill generated by the sale of Regular Zone10% in 2010, which is being depreciated over the life of the asset in line Peak Period Monday-Friday: 24.20¢ /km 22.75¢ /kmwith the traffic expectations. 6am-7am, 9am-10am, 3pm-4pm, 6pm-7pm Peak Hours DIVIDENDS Monday-Friday: 25.20¢ /km 22.95¢ /km 7am-9am (2010: 7.30am-8.30am), 4pm-6pm Light Zone CAD 2012 2011 Chg.% Peak Period Monday-Friday: 22.60¢ /km 21.25¢ /km Q1 87.5 82.5 +6.6 6am-7am, 9am-10am, 3pm-4pm, 6pm-7pm Q2 87.5 82.5 +6.6 Peak Hours 23.55¢ /km 21.45¢ /km Q3 87.5 82.5 +6.6 Monday-Friday: 7am-9am, 4pm-6pm Q4 189.9 Midday Rate 21.00¢/km 19.35¢/km Q4 147.3 Weekdays 10am-3pm Total Q4 337.1 102.3 +229.6 Off Peak Rate Total 599.9 348.8 +72.0% Weekdays 7pm-6am, 19.35¢/km 19.35¢/km Weekends & public holidays Extraordinary 110.0 Transponder: Monthly rental $3.00 $2.75 Total 599.9 458.8 +30.7% Transponder: Annual rental $21.50 $21.50 Video toll per journey $3.80 $3.65Including the distributions made in the fourth quarter, dividends reachedCAD600mn in 2012. The detail of the annual distributions in 2008-2012 is Cargo per journey $0.60 $0.50 (This is not a charge per km.)shown in the following table:CAD LANE OPENINGS Total Chg.%2008 135 +12.5 On 29 August the new lanes for segments C5 and C6 were opened to2009 190 +40.7 traffic (one 16km lane in each direction), with these segments of the2010 300 +57.9 motorway the first to achieve their final configuration.2011 459 +52.92012 600 +30.7 TRAFFICTraffic performance, measured in kilometres travelled (VKT, +0.6%)showed an improvement over the same period in 2011 (-0.5%), thanksboth to the number of journeys (+0.1%) and the average length of thejourney (+0.5%). From mid-2011 there has been an appreciablestabilisation in light vehicle traffic and an increase in heavy vehicle traffic, 4
  5. 5. Results January-December 2012SERVICES contracts for the Ministry of Development. In addition, the company was more selective in taking on contracts, with the aim of controlling working capital investment and protecting its profit margins. Payments received thanks to RD 4/2012 and RD 7/2012 relating to public Dec-12 Dec-11 Chg.(%) LfL (%) administration supplier payments amounted to EUR499mn.Revenues 2,951.1 2,820.6 4.6 1.3EBITDAEBITDA Margin 313.6 10.6% 311.8 11.1% 0.6 -2.0 AMEYEBIT 203.3 207.4 -2.0 -5.2EBIT Margin 6.9% 7.4% Dec-12 Dec-11 Chg.(%) LfL (%)Backlog 12,783.9 12,424.7 2.9 1.5 Revenues 1,490.6 1,283.7 16.1 8.3 EBITDA 118.3 113.3 4.4 -2.6 EBITDA Margin 7.9% 8.8%In comparable terms, the Services account posted a slight increase in EBIT 100.9 96.7 4.4 -2.6revenues (+1.3%), with a mildly negative performance at the EBITDA EBIT Margin 6.8% 7.5%level (-2.0%). Backlog 7,207.0 6,252.6 15.3 12.1The revenue growth was driven by the growth in the UK (+8.3%), whichoffset the weakness of activity in Spain (-5.0%), where there was apersistence of the trend seen in earlier quarters as a consequence of the Revenues increased 8.3% in comparable terms as a reflection of the startchallenging economic conditions. The decline at the EBITDA and EBIT of various contracts, notably the prisoner transport and custody contractlevels is a consequence of non-recurrent positive impacts at Amey in the awarded in 2011 and the infrastructure maintenance contract for the Cityprevious financial year and the reduced activity in Spain. of Sheffield. The rest of the growth was driven by higher turnover onBUSINESSES IN SPAIN existing contracts such as highway maintenance in Area 9 and the London area due to the Olympic Games, work which was completed in the first half of the year. Dec-12 Dec-11 Chg. (%) In spite of the revenue growth, EBITDA (-2.6%) and EBIT (-2.6%) wereRevenues 1,460.6 1,536.9 -5.0 lower than in the previous year, as a consequence of non-recurrentEBITDA 195.3 198.4 -1.6 profits booked in 2011 on the sale of machinery (EUR7mn) and costsEBITDA Margin 13.4% 12.9% related to new contract start-up in 2012.EBIT 102.4 110.7 -7.6EBIT MarginBacklog 7.0% 5,576.9 7.2% 6,172.1 -9.6 BACKLOG The backlog reached EUR12,784mn (+2.9% vs. December 2011), drivenFigures for Spain include central service costs and the start of operations by the increase in Amey’s backlog.in other countries (Poland). Excluding these impacts, Spanish business In the UK, the 25-year EUR1,414mn urban infrastructure maintenanceEBITDA and EBIT would be reduced by 1% and 6.6% vs. -1.6% and - contract for Sheffield was added to the backlog once the financing had7.6% reported, showing the strength of the business in a very been closed in August 2012.challenging economic situation. In Spain, the highlights in the waste collection and treatment businessIn line with the rest of the year, revenues and EBITDA were 5% and were the award of an 18-year contract for two treatment plants in the1.6% respectively lower than in 2011. The deterioration at the EBIT level Canary Islands, the renewal of the urban waste collection and highwaywas more pronounced (-7.6%), as 2012 was the first full year for certain cleaning contract for San Vicente de Raspeig (for eight years) and thecontracts with high depreciation levels. This was the case for the new renewal for one year of the contract for the cleaning and maintenance ofwaste collection and treatment contract in Murcia, and the highway green zones in Madrid (10 districts). In the infrastructure maintenancemaintenance contract for the A2 freeway. and facility management business, other than the energy managementNevertheless, in spite of this reduced activity, sales margins were in line contract for Torrejón, for 20 years, the highlights were the maintenancewith 2011 as a reflection of control over costs, which in recent years have contract for various sections of the State roadway network (three years),been adapted to the decline in activity, and active management of the new contract for call centre services for the Madrid Town Hall (fourportfolio quality. years) and an energy services maintenance contract for outdoor lighting for the municipality of Soto del Real in Madrid.In the Waste Collection and Treatment business, the contraction ineconomic activity in Spain resulted in a fall in the tonnage of wastemanaged (-10% vs. 2011). In the urban waste collection and highwaycleaning contracts, revenues fell due to various local authorities reducingservice levels due to budget restrictions; other contracts were terminatedor not renewed due to their low margins or as a result of paymentdifficulties.In the Infrastructure Maintenance business, revenues fell due to areduction in services required by clients, notably highway maintenance 5
  6. 6. Results January-December 2012CONSTRUCTION BUDIMEX Like-for-Like Dec-12 Dec-11 Chg. % (%) Like-for-Like Dec-12 Dec-11 Chg. % (%) Revenues 1,420.3 1,323.5 7.3 8.1Revenues 4,325.6 4,243.8 1.9 0.1 EBITDA 57.2 71.0 -19.4 -18.8EBITDA 336.9 246.4 36.8 33.0 EBITDA Margin 4.0% 5.4%EBITDA Margin 7.8% 5.8% EBIT 45.1 63.6 -29.1 -28.5EBIT 298.4 213.9 39.5 35.4 EBIT Margin 3.2% 4.8%EBIT Margin 6.9% 5.0% Backlog 1,193.9 1,919.7 -37.8 -43.1Backlog 8,699.4 9,997.2 -13.0 -14.2 Budimex posted significant revenue growth as a consequence of the execution of large projects and an improvement in the weather. TheActivity was stable in 2012 in comparable terms (+0.1%), maintaining the lower margins reflected the losses generated on PNI’s contracts.same dynamic as in the past few years, with a significant decline in the Consolidation of PNI ceased in November, after the company filed foractivity in Spain offset by strong growth in international activities. creditor protection on 24 August 2012. Excluding PNI revenues wouldEBITDA growth reached EUR337mn, principally due to the settlement and have grown by 4%, EBITDA by 8%.reversal of EUR135mn of net provisions on completion of works. The backlog reached EUR1,194mn, 43.1% below the 2011 level (-27% excluding PNI in both years), reflecting announced cutbacks of publicBACKLOG investment in roads, the completion of some large projects. WEBBER Dec-12 Dec-11 Chg. % Like-for-LikeCivil work 6,837.4 7,602.4 -10.1 Dec-12 Dec-11 Chg. % (%)Residential work 284.2 363.7 -21.9 Revenues 591.5 424.9 39.2 28.4Non-residential work 867.2 1,334.8 -35.0 EBITDA 23.0 17.1 34.5 22.8Industrial 710.6 696.3 2.1 EBITDA Margin 3.9% 4.0%Total 8,699.4 9,997.2 -13.0 EBIT 17.7 11.4 55.1 40.9 EBIT Margin 3.0% 2.7%The 13% contraction in the backlog vs. December 2011 was due to a Backlog 1,288.3 1,650.6 -21.9 -20.5high level of executions, a lower level of new contract awards, the Webber posted strong revenue growth in local currency terms (+28%)exclusion from the consolidation perimeter of PNI’s backlog (EUR275mn) thanks to the start of projects awarded the previous year and the higherafter it was deconsolidated in November and contract cancellations level of execution on the managed lanes. In euro terms, revenue growth(notably EUR272mn on the cancellation of part of the work for the Central reached 39% due to euro weakness against the US dollar.Greece). The contraction in the backlog (-20.5%) was a consequence of a highThe ability to carry out complex projects such as the LBJ and NTE toll level of execution after a significant volume of contract awards in 2011.motorways in Texas is positioning Ferrovial as a market reference in theUSA.During the 2012 financial year, entries into the backlog included OTHER MARKETSimportant international civil works projects, such as the construction of Like-for-Like Dec-12 Dec-11 Chg. %the 407ETR East Extension and the US460 toll motorways in Canada and (%)the State of Virginia (USA) respectively. Revenues 2,313.9 2,495.3 -7.3 -9.1The weight of the international backlog continues to increase, and it now EBITDA 256.7 158.3 62.2 56.3represents 70% of the total at EUR6,060mn vs. the domestic backlog’sEUR2,640mn. EBITDA Margin 11.1% 6.3%The domestic backlog contracted by 17%, mainly as a reflection of the EBIT 235.6 138.9 69.7 62.8drop in public-sector contracts put out to tender in Spain (-45%). EBIT Margin 10.2% 5.6%MARKETS Backlog 6,217.2 6,426.9 -3.3 -3.2The internal management structure of the Construction division changed The revenue weakness was principally due to the performance of thein the third quarter, to adapt to the new market reality. Budimex and Spanish market (-24%). Works related to the new toll motorways inWebber continue to report directly, whereas Spain is now included as just Texas continued to post positive results. Margin improvement was mainlyanother area of activity and is no longer reported separately. thanks to reversal of provisions on completion of projects that were not offset by the start of new projects. The amounts collected relating to RD 4/2012 for the payment of suppliers to the public administrations amounted to EUR190mn. 6
  7. 7. Results January-December 2012AIRPORTS By markets, traffic growth at Heathrow was driven by the favourable performance of the North Atlantic routes (+3.2%), while traffic to other long-haul destinations declined marginally. There was a notableOn 15 October, the company announced that the commercial brand name improvement in routes to Brazil, the Middle East (a partial recovery inBAA was no longer in use, and had been replaced by HAH. There were spite of the instability in the region) and the Far East (a recovery in trafficvarious reasons for this change, amongst which the fact that with the sale after the Tsunami in Japan in 2011), offset by the weakness of traffic onof Stansted, Heathrow now represents 95% of the former group. African and Indian routes. European traffic improved modestly, dependingIn the 2012 financial year, Ferrovial completed two disposals in HAH. On on the market (+0.6%), as a reflection of the macroeconomic situation in17 August Ferrovial announced the sale of 10.62% of the group to Qatar each country.Holding for GBP478mn and on 31 October the sale of 5.72% to CIC Stansted traffic fell 3.2%, although there was a return to growth after theInternational for GBP257.4mn. Both these deals were closed in 2012. summer after a number of years in decline. In the first nine months ofThe contribution of the Airports division to Ferrovial’s equity-accounted the year traffic fell 4.6%, but grew 1.8% in the fourth quarter. Thisresults reached EUR231mn, principally due to the following non-recurrent growth was based on capacity increases in Ryanair’s winter schedule.items: a EUR98mn capital gain on the sale of Edinburgh airport, the Traffic growth by destination was as follows:positive impact of the two percentage point cut in corporation tax in theUK (EUR90mn) and EUR65mn for marking the derivatives portfolio tomarket. The capital gain on the sale of 16.34% of HAH amounted to 2012 2011 LfL (%)EUR186mn (of which EUR115mn in the impairment and sale of fixed UK 16.8 16.9 -0.7%assets line and EUR71mn as a tax credit). Europe 45.1 44.7 0.9% 37.8 37.6 0.5%TRAFFIC PERFORMANCE Long Haul Total 99.7 99.2 0.5%Traffic at Heathrow (+0.9%) reached an all-time high in 2012 with 70.0million passengers. Characterised by higher load-factors (75.6% vs. TARIFFS75.2% in 2011), a record in the history of the airport.Underlying traffic growth was positive in 2012, although it fluctuated The increase in the maximum aeronautical tariffs applicable in the 2012-during the year: the first quarter performance was very satisfactory, 2013 regulatory year came into effect on 1 April 2012.helped by the extra day (2012 was a leap year), the Easter holidays The following table compares the tariff increases of 2011 with those offalling earlier than in 2011 and the Royal Wedding, which took place in 2012:2011. In the third quarter (July and August), Heathrow traffic wasaffected by the Olympic Games in London: passenger numbers fell by 2012 2011 Regulationmore than 400,00 because UK passengers stayed in Britain to take part Heathrow +12.7% +12.2% RPI+7.5%and non-British travellers avoided the UK in case of mishap. Since thentraffic growth has been continuous, with record months in September, Stansted +6.8% +6.3% RPI+1.63%November and December 4Q12 +1.6%). The tariffs that will come into force on 1 April 2013 will be calculated based on the rate of inflation in August 2012, which was 2.9%. Tariffs at Heathrow will increase by 10.4%.GBP Traffic Revenues EBITDA EBITDA Margin Dec-12 Dec-11 Chg. Dec-12 Dec-11 Chg. Dec-12 Dec-11 Chg. Dec-12 Dec-11 Chg. (bps)Heathrow 70.0 69.4 0.9% 2,108 1,936 8.9% 1,103 983 12.2% 52.3% 50.8% 155Heathrow express 181 174 4.2% 67 62 6.8% 36.8% 35.9% 89Heathrow total 70.0 69.4 0.9% 2,289 2,110 8.5% 1,169 1,045 11.9% 51.1% 49.5% 154Stansted 17.5 18.0 -3.2% 242 234 3.0% 94 87 8.3% 39.0% 37.1% 190Regulated airports 87.4 87.4 0.0% 2,531 2,344 8.0% 1,263 1,132 11.6% 49.9% 48.3% 163Edinburgh* 42 41 3.9% 17 16 2.4% 39.2% 39.7% -56Glasgow 7.2 6.9 4.2% 87 82 5.9% 32 30 5.2% 36.5% 36.8% -26Aberdeen 3.4 3.1 8.3% 57 53 8.2% 21 18 12.1% 36.1% 34.8% 124Scottish airports 10.5 10.0 5.5% 187 176 6.1% 69 65 6.4% 37.0% 36.9% 10Southampton 1.7 1.8 -3.9% 27 27 -1.9% 8 10 -13.8% 31.5% 35.9% -436Holding & adl. -98 -93 14 20Total (LfL) 99.7 99.2 0.5% 2,646 2,455 7.8% 1,355 1,227 10.5% 51.2% 50.0% 125Perimeter changes 69 60Total 99.7 99.2 0.5% 2,646 2,524 4.8% 1,355 1,287 5.3% 51.2% 51.0% 22*Until May 7
  8. 8. Results January-December 2012 At Heathrow, retail revenues increased by 5.7%, and net retail revenuesINCOME STATEMENT per passenger rose 4.4% to GBP6.21. The substantial increase was a reflection of a combination of traffic growth and a good performance from the luxury goods outlets, duty-free, catering, foreign exchange and parking. GBP Dec-12 Dec-11 Chg. % LfL (%) Sales growth at the duty-free and air-side tax-free shops was very Revenues 2,645.9 2,524.0 4.8 7.8 positive thanks to the increase in non-European travellers and to the EBITDA 1,355.2 1,287.2 5.3 10.5 opening of new commercial space in Terminal 3 and World Duty Free in EBITDA margin % 51.2% 51.0% terminals 3 and 4. Sales growth in the luxury goods and fashion outlets was particularly positive. Revenue growth in the bureaux de change was Depreciation 582.8 652.9 -10.7 principally due to improvements in the terms of their commercial EBIT 772.4 634.3 21.8 21.2 contracts. The growth in the restaurant sector over and above the EBIT margin % 29.2% 25.1% increase in the number of passengers was a reflection of the improved Impairments & disposals 151.2 9.4 offering, with new premium outlets, the new trading agreements and the Financial results -669.8 -932.6 28.2 11.0 general effort to improve the quality and speed of service. Finally, EBT 253.8 -288.9 187.9 89.5 advertising revenues increased thanks to the positive impact of the Olympic Games. Corporate income tax 120.9 267.6 -54.8 -95.7 Net income (100%) 374.7 -21.3 n.s. 85.7 At Stansted, retail revenues fell 1.9% over the year, although the net Net income retail revenues per passenger increased by 2.8%. €(49,99%%) 230.7 -12.6 n.s. 80.8 Other revenues increased by 4.7%, driven by the rise in rail revenues (+4.4%) thanks to price increases.Revenue and EBITDA growth of 7.8% and 10.5% respectively, supportedby the revenue breakdown shown in the table below and cost- REGULATORY MATTERScontainment (costs only increased by 5.1% in comparable terms). Thesignificant growth at the EBIT level was due to the drop in depreciation TARIFFS FOR THE NEXT FIVE-YEAR PERIOD (Q6)after the accelerated depreciation of T1 and T5C booked in 2011. Since presenting its initial business plan for the next regulatory period (Q6) on 30 July, Heathrow has continued working with both the CAA andGBP Dec-12 Dec-11 Chg. % LfL (%) the other interested parties to define the future development of theAeronautic 1,529.5 1,424.5 7.4 10.2 airport in the next regulatory period, which starts in April 2014.Retail 604.3 601.6 0.4 4.5 The constructive engagement between the parties included discussions ofOthers 512.1 497.9 2.8 4.7 the different variables that influence how the tariffs are determinedTOTAL 2,645.9 2,524.0 4.8 7.8 (capex, traffic forecasts, opex and retail revenues). This process concluded with Heathrow’s publication of its complete business plan for the next five-year period. The proposed annual tariff increase based on this business plan, assuming no initial adjustment in the tariff, is RPI +5.9%. Aeronautical Retail Other Heathrow’s business plan assumes modest increase passenger traffic over LfL LfL LfL GBP Dec-12 (%) Dec-12 (%) Dec-12 (%) the next regulatory period that, after an allowance for shocks averages around the airport’s current un-shocked traffic performance, Heathrow Heathrow 1,279.7 11.3 460.1 5.7 549.2 4.7 believes it is essential to properly reflect the likely impact on passenger Stansted 133.4 5.2 81.6 -1.9 26.6 8.6 traffic over any medium or long-term horizon from potential shocks given Glasgow 44.0 4.6 28.1 9.8 14.6 2.7 that historically they have impacted its traffic by an average of close to Edinburgh 23.0 4.7 13.7 1.8 5.8 5.4 1.5%. Aberdeen 32.8 5.9 11.5 13.4 13.1 9.8 The business plan also includes the proposed investment for the period, Southampton 16.6 0.7 8.0 -8.6 2.4 5.0 Other & amounting to approximately GBP3,000mn (at 2011/2012 prices). adjustments 1.4 -17.3 -99.6 5.7 After the publication of this business plan, it is now up to the CAA to Total airports 1,529.5 10.2 604.3 4.5 512.1 4.7 make its own analysis, after which it will make an initial proposal for theAeronautical revenues (+10.2%) reflected the strong performance at tariff in April 2013. The CAA’s final tariff proposal is expected in OctoberHeathrow (+11.3%): traffic +0.9%, tariffs +12.7% since April 2012, but 2013.diluted in real terms due to the difference in the actual traffic mix from REGULATORY ASSET BASE (RAB)that used in the tariff calculations (more passengers in transit and lowerrevenues from apron parking) amounting to around GBP40.2mn, this GBP Heathrow Stansted Totalshortfall (or yield dilution) will be recovered through the ‘K factor’ true-up December 2011 12,490.2 1,359.5 13,849.7mechanism in the years commencing 1 April 2013 and 1 April 2014. At December 2012 13,471.0 1,342.7 14,183.7Stansted (+5.2%) the negative traffic growth (-3.2%) was mitigated by The increase in RAB in 2012 reflects the investments madethe tariff increases introduced in April 2012 (+6.8%) and the reductions (GBP1,180mn), the increase in inflation (GBP435mn) which was partiallyin airline discounts. offset by depreciation during the period (GBP605mn) and the profilingRetail revenues (+4.5%). The positive trend in retail revenues continued (GBP45mn).in the same path as seen in previous years. 8
  9. 9. Results January-December 2012 investment and GBP100mn for working capital) and GBP750mn ofNET DEBT liquidity lines. The new loan has a maturity of five years (June 2017) and replaces a similar loan maturing in August 2013. The margins on tranche Class AGBP Dec-12 Dec-11 Chg. % and Class B are 150 and 225 basis points respectively. HAH also cancelled a GBP1,000mn bond maturing in February 2012 andSenior loan facility 587.7 684.4 -14.1% repaid GBP475mn of the GBP625mn of the Class B loan and GBP125mn ofSubordinated 717.0 538.1 33.3% the subordinated bank debt of GBP175mn maturing in 2015.Securitized Group 11,315.2 10,663.4 6.1% In April 2012, the conditions of the Senior loan facility (the previousNon-Securitized Group 337.2 1,035.6 -67.4% Toggle debt) were modified, and changed from perpetual debt to a seven-year term with a slight increase in the cost (7.00% vs. 6.89%), allOther & adjustments -26.2 -59.5 -55.9% of which has enabled the company to gain flexibility for dividendTotal 12,931.0 12,862.0 0.5% payments to its shareholders. HAH’s financial structure is now principally capital markets-oriented, withIn 2012 the financial structure of the debt was transformed. This intense only marginal bank financing.activity in the capital markets (bond issuance of more than GBP3,000mn)allowed the company to extend its debt maturity calendar, expand thenumber of markets and currencies and significantly reduce its banking DIVIDENDSexposure. In 2012, for the first time since its acquisition in 2006, HAH started to pay quarterly dividends to its shareholders. In 2012 HAH distributedBOND ISSUES AND REFINANCINGS GBP240mn to its shareholders, and in 2013 it expects to distribute slightly more than this.Since the beginning of 2012 the company has made 11 debt placements,which have enabled it to capture more that GBP3,000mn in variousdifferent currencies, rating levels and formats. The particular highlights DISPOSALSwere the bond issues in the USA (USD500mn) and the inaugural issuance SALE OF STANSTED AIRPORTin Canada (CAD400mn), which formed part of the company’sgeographical diversification and already included issuance in sterling, The sale process started in August 2012 was concluded on 18 Januaryeuros and French francs. 2013 with the announcement of the sale of Stansted airport to MAG (Manchester Airport Group) for GBP1,500mn (EBITDA 2012 GBP94mn, Amount Maturity Coupon RAB 2012 GBP1,343mn). The deal is expected to be completed by end- Class A February. The proceeds are expected to be principally used to amortise CAD400mn 7 years 4.000% debt. GBP300mn 3 years 3.000% SALE OF EDINBURGH AIRPORT USD500mn 3 years 2.500% On 23 April 2012, HAH announced the sale of Edinburgh airport to GIP for CHF400mn 5 years 2.500% GBP807.2mn, which implies a multiple of 16.7x the airport’s 2011 EUR700mn 5 years 4.375% EBITDA. The sale proceeds have been used to cancel non-regulated airports’ bank debt. GBP95mn (ILS) 27 years 3.334% GBP180mn* 10 years 1.650% EUR50mn* 20 years 4.250% (yield) EUR50mn* 20 years 4.125% (yield) Class B GBP600mn 12 years 7.125% GBP400mn 8 years 6.000% High Yield GBP275mn 7 years 5.375%(*) Private placementIn June 2012, HAH refinanced its credit and liquidity lines. The new loanmet high demand which reached GBP400mn from 17 banks, both Englishand international. The strength of the demand allowed the maximumamount of the loan to be raised to GBP2,750mn, included a revolvingcredit for GBP2,000 (GBP1,500mn Class A, GBP400mn Class B for 9
  10. 10. Results January-December 2012CONSOLIDATED INCOME STATEMENT Before Fair Before Fair Fair value Fair value value Dec-12 value Dec-11 Adjustments Adjustments Adjustments Adjustments Revenues 7,686 7,686 7,446 7,446 Other income 17 17 15 15 Total income 7,703 7,703 7,461 7,461 COGS 6,776 6,776 6,643 6,643 EBITDA 927 927 817 817 EBITDA margin 12.1% 12.1% 11.0% 11.0% Period depreciation 219 219 192 192 EBIT (ex disposals & impairments) 708 708 625 625 EBIT margin 9.2% 9.2% 8.4% 8.4% Disposals & impairments 115 -63 52 229 -130 99 EBIT 823 -63 760 854 -130 724 EBIT margin 10.7% 9.9% 11.5% 9.7% FINANCIAL RESULTS -338 48 -290 -360 57 -303 Financial result from financings of infrastructures projects -298 -298 -265 -265 -6 2 -4 -11 -3 -13 Derivatives, other fair value adjustments & other financial result Financial result from financings of other companies -26 -26 -82 -82 Derivatives, other fair value adjustments & other financial result -7 46 38 -2 60 58 Equity-accounted affiliates 222 62 284 18 1 20 EBT 707 47 754 512 -72 440 Corporate income tax -108 0 -108 -63 2 -61 Net Income from continued operations 599 47 646 449 -70 379 Net income from discontinued operations 165 679 844 CONSOLIDATED NET INCOME 599 47 646 614 609 1,223 Minorities 60 3 64 0 20 19 NET INCOME ATTRIBUTED 660 50 710 614 629 1,243Airports division: on 26 October 2011 Ferrovial sold 5.88% of FGP Topco, the holding company of the HAH group. This resulted in HAH being consolidated by the equitymethod from November 2011 onwards. Under NIIF 5, 2011 results from HAH are reported under the headline of “Net income from discontinued operations” for 10 monthswhile 2 months are accounted under the “Equity-accounted affiliates”. 2012 HAH results are accounted under “Equity-accounted affiliates”. 10
  11. 11. Results January-December 2012 NET FINANCIAL EXPENSES REVENUES Dec-12 Dec-11 Chg. % Like-for-Like (%) Dec-12 Dec-11 Chg. %Construction 4,325.6 4,243.8 1.9 0.1 Infra projects -297.9 -265.4 -12.2Toll Roads 381.4 389.7 -2.1 -3.1 Other -26.3 -82.2 68.0Services 2,951.1 2,820.6 4.6 1.3 Net financial result (financing) -324.1 -347.7 6.8Others 28.2 -8.3 n.s. Infra projects -3.7 -13.3 72.3Total 7,686.4 7,445.8 3.2 0.9 Other 38.2 57.6 -33.7 Derivatives, other fair value adjustments & other financial result 34.5 44.4 -22.2 EBITDA Financial Result -289.6 -303.3 4.5 Dec-12 Dec-11 Chg. % Like-for-Like (%) The financial result improved by 4.5% thanks to a combination of:Construction 336.9 246.4 36.8 33.0 A 6.8% improvement in the financing result. Expenses on infrastructureToll Roads 271.6 283.2 -4.1 -5.1 projects increased due to the higher level of debt, principally associatedServices 313.6 311.8 0.6 -2.0Others 4.6 -24.0 n.s. with the projects under development. Financial expenses at the otherTotal 926.8 817.2 13.4 11.2 companies fell as a reflection of reductions in their borrowing levels and lower costs in 2012 after the 2011 refinancing of corporate debt (EUR791mn repaid and EUR1,314mn refinanced), and lower interest rates. DEPRECIATION The result of derivatives and other fair value adjustmenst (inflows), is aThe increase vs. the same period last year (+12.9% in comparable terms) reflection of the improvement in Ferrovial’s share price in 2011 and itsto EUR219mn was principally a reflection of the inclusion of new positive impact on the derivative contracts that cover the retribution plansconcessions at Cintra within the consolidation perimeter and the start of linked to the share performance.operations on contracts requiring significant investments at the Services EQUITY ACCOUNTED RESULTSdivision. EBIT (before impairments and disposal of fixed assets) Dec-12 Dec-11 Chg. % Construction -1.4 -0.1 n.s. Dec-12 Dec-11 Chg. % Like-for-Like (%) Services 12.0 1.9 n.s.Construction 298.4 213.9 39.5 35.4 Toll Roads 42.4 27.5 54.0Toll Roads 204.4 230.5 -11.3 -12.2 Airports 230.7 -9.8 n.s.Services 203.3 207.4 -2.0 -5.2 Total 283.7 19.6 n.s.Others 1.9 -26.6 n.s.Total 708.0 625.2 13.2 10.6 The companies consolidated by the equity method made a contribution of*For purposes of analysis, all the comments referring to EBIT are before EUR284mn (vs. EUR20mn in 2011). The 2012 figure includes theimpairments and disposals of fixed assets. contributions from the 407ETR toll motorway (EUR45mn) and HAHExcluding the impact of the exchange rate and variations in the (EUR231mn).consolidation perimeter, the increase would be 10.6%. NET RESULT IMPAIRMENTS AND DISPOSAL OF FIXED ASSETS Net profit reached EUR710mn vs. EUR1,243mn in 2011. The differenceThis element includes impairments for 63 million euros, corresponding to was principally due to the capital gains on the disposals of 5.88% of HAHthe Services division in the UK, to certain real estate lots and the (EUR847mn), Swissport (EUR199mn) and the M45 toll motorwayadditional impairment for PNI (a Budimex subsidiary) to cover the part of (EUR27mn) in 2011.the initial investment that was not already provisioned.The capital gain on the disposal of 16.34% of HAH reached 115 millioneuros. 11