January-June 2013 results


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January-June 2013 results

  1. 1. January - June 2013 Results 1 A I R P O R T SM O T O R W A Y S C O N S T R U C T I O NS E R V I C E S INDEX GENERAL OVERVIEW....................................1 Performance By Business Line ...................1 TOLL ROADS................................................2 Assets in operation ...................................2 Assets under development ........................3 Contracts out to tender .............................3 Assets under creditor protection.................4 407-ETR ..................................................5 SERVICES ....................................................6 New organisational structure .....................6 Results ....................................................6 Spain ......................................................6 United Kingdom .......................................6 International............................................7 Backlog ...................................................7 Corporate activity .....................................7 CONSTRUCTION...........................................8 Budimex ..................................................8 Webber ...................................................8 Ferrovial Agromán ....................................8 Backlog ...................................................8 AIRPORTS ...................................................9 HAH.- Traffic performance.........................9 Tariffs .....................................................9 Income statement ..................................10 Revenue breakdown ...............................10 Regulatory aspects .................................10 Net debt................................................11 Dividends ..............................................11 Disposals ...............................................11 CONSOLIDATED INCOME STATEMENT .........12 BALANCE SHEET AND OTHER MAGNITUDES .14 Consolidated net debt .............................15 Corporate credit rating............................15 Corporate bond issuance.........................15 CONSOLIDATED CASH FLOW.......................16 Cash Flow Excluding Infrastructure Projects ............................................................17 Cash Flow from Infrastructure Projects .....18 APPENDIX I: SIGNIFICANT EVENTS .............19 APPENDIX II: PRINCIPAL CONTRACT AWARDS ................................................................20 APPENDIX III: EXCHANGE-RATE MOVEMENTS ................................................................21 Comparable information: The principal adjustments made to achieve this comparable analysis is the elimination of fair-value adjustments (hedging, impairments and asset revaluations), Exchange-rate movements, divestments and any costs related to acquisitions. *EBIT For the purposes of analysis, all the comments referring to EBIT are before impairments and disposals of fixed assets GENERAL OVERVIEW During the first half of the year, Ferrovial has seen the culmination of important corporate operations, such as the acquisition of Enterprise, one of the principal British utilities and public-sector services companies, or the start of services to the mining industry with the acquisition of Steel Ingeniería in Chile. Also in this period, the sale of Stansted airport has been completed and a new concession has been awarded to a consortium led by Cintra (another section of the North Tarrant Express motorway in Texas [USA], currently in its building phase like the LBJ project). In addition to all these, the company made its two first corporate bond issuances. The integration of Enterprise into Amey, the UK subsidiary of Ferrovial Servicios, will create one of the most diversified companies in the sector, with a staff of 21,000, and will double its annual turnover in the UK to more than GBP2,000mn. The deal will enable Ferrovial to enter the utilities services sector. Ferrovial, through a consortia led by Cintra, was awarded a new concession (another section of the North Tarrant Express toll in Texas (USA), with a total estimated investment of USD1,380mn. During the first six months of the year, HAH paid dividends of GBP128mn to its shareholders. The 407ETR also paid dividends during the semester amounting to CAD230mn. In July it paid a third dividend of CAD200mn. During the first half, Ferrovial issued two corporate bonds: its inaugural issue (five years, EUR500mn, 3.375% coupon) and a second issue (eight years, EUR500mn, coupon 3.375%). In both cases, demand was particularly strong, with oversubscription of 11x and 6x respectively. The funds obtained were used for the early repayment of corporate debt. With these issues, Ferrovial has managed to optimize its corporate debt maturity calendar, lower the cost of debt while cancelling most of the bank debt at corporate level. At the end of the first six months of the year, the group’s net cash position, excluding infrastructure projects, stood at EUR427mn after making net investments of EUR558mn and paying dividends for EUR273mn. Performance By Business Line The Services backlog reached a record high with the incorporation of Enterprise. Sales in Spain remained stable in spite of the difficult economic environment. Tariff increases and cost controls combined to allow notable EBITDA growth, both at Heathrow Airport (+21%), and at the 407ETR (+10%), both in local currency terms [both assets are consolidated by the equity method]. In respect of traffic, Heathrow reached 34mn passengers, reflecting a 2.4% increase. 407ETR traffic, flat at (-0,3%), reflects the combination of an improvement in the average distance travelled (+0.7%) and a slight decline in the number of vehicles (-1.0%). At the Construction division, the trend was similar to previous quarters, with the decline in the domestic business partially offset by international growth. At the Toll Roads division, there was no recovery in traffic due to the combination of a weak economic environment and high fuel prices (close to all-time highs). Consolidated revenues reached EUR3,758mn, EBITDA EUR415mn and net profit EUR287mn. Jun-13 Jun-12 Chg. (%) LfL (%) Jun-13 Dec-12 Chg. (%) Revenues 3,757.7 3,655.8 2.8 3.8 Construction Backlog 8,102 8,699 -6.9 EBITDA 414.6 438.7 -5.5 -1.6 Services Backlog 15,592 12,784 22.0 EBIT* 301.7 332.6 -9.3 -4.2 Net result 287.3 256.6 12.0 26.9 Traffic Jun-13 Jun-12 Chg. (%) Capex -811.0 -382.0 112.3 ETR 407 (VKT´ 000) 1,103,360 1,106,661 -0.3 Chicago Skyway (ADT) 38,288 39,729 -3.6 Indiana Toll Road (ADT) 25,765 25,447 1.2 Autema (ADT) 14,130 15,924 -11.3 Jun-13 Dec-12 Chg. (mn) Ausol I (ADT) 10,132 12,300 -17.6 Net financial Debt -6,459.6 -5,106.5 -1,353 Ausol II (ADT) 12,707 13,564 -6.3 Net Debt Ex-Infrastructure Projects 426.6 1,488.1 -1,062 Heathrow (million pax.) 34.4 33.6 2.4
  2. 2. Results January-June 2013 2 TOLL ROADS Jun-13 Jun-12 Chg (%) Like for Like (%) Revenues 206.2 186.4 10.6 10.8 EBITDA 125.1 150.8 -17.0 -17.0 EBITDA Margin 60.7% 80.9% EBIT 91.0 119.7 -24.0 -23.9 EBIT Margin 44.1% 64.2% Revenues increased by 11%, partly due to the entry into operation of the SH-130 in November 2012 and the significant tariff increases on the Chicago Skyway (+14% for light traffic and +25% for heavy traffic), with traffic performance more resilient than expected. The revenue growth was also driven by the reversal of a provision booked in 2012 on the Norte Litoral for a potential fine to be imposed by the government for non-availability. The reversal of EUR20mn of VAT-related provisions at Autema booked in 1Q12 explained the 17% drop at the EBITDA level. Assets in operation TRAFFIC PERFORMANCE In Spain, the rate of decline in traffic on all the corridors continued at the same pace seen in previous quarters. This decline is explained by the deterioration in the economy and the rise in the price of fuel. On top of the fall in traffic on the corridors, toll roads are suffering from an ongoing loss of market share for two fundamental reasons: the cumulative fall in traffic since the beginning of the crisis has resulted in a considerable improvement in traffic conditions on the free alternative routes and secondly, the increasing disinclination of drivers to pay tolls due to the loss of purchasing power. In addition, VAT rose from 18% to 21% on 1 September 2012, which implied a 2.5% increase in tariffs paid by motorway users. There have been other individual circumstances which have had a negative impact on Ausol I, such as the 7.5% increase in tariffs which came into effect on 28 July 2012 due to the cancellation of a compensation account approved in 1999 for tariff reductions at the time, and the opening of the San Pedro de Alcántara tunnel on 26 June 2012. This all led to a significant drop in the motorway’s market share on a corridor which, although it is starting to show signs of improvement, is still falling as a reflection of the economic crisis. One positive note is the recovery in the second quarter of the heavy vehicle traffic at Ausol II, thanks to a local quarry restarting operations. In the Azores, on 15 December 2012 the concession celebrated its first year under operation. The rate of decline in traffic moderated substantially in the second quarter after the normalization of the negative calendar effect in the first quarter and the improvement in the weather, in a region where tourism is so important. On the M4 traffic has shown signs of recovery as a reflection of the improvement in economic conditions in Ireland and particularly in employment. Both traffic on the corridor and the motorway’s market share improved in the second quarter. In Greece traffic on both the Central Greece and the Ionian Roads motorways continues in sharp decline as a consequence of the combination of two factors: the economic crisis and the high price of fuel. In the case of Central Greece, the concession only has one of the planned toll booths in operation (located just after the last exit to Ionian Roads). Traffic Revenues EBITDA EBITDA Margin Net Debt 100% Global consolidation Jun-13 Jun-12 Chg. Jun-13 Jun-12 Chg. Jun-13 Jun-12 Chg. Jun-13 Jun-12 Jun-13 Share Intangible assets Chicago Skyway 38,288 39,729 -3.6% 29.0 25.7 12.7% 25.1 22.0 13.9% 86.6% 85.7% -1,127 55% SH-130 5,463 6.5 n.s. 2.3 0.2 n.s. 35.2% -904 65% Ausol I 10,132 12,300 -17.6% 20.4 22.0 -7.4% 12.8 16.6 -23.1% 62.6% 75.4% -452 80% Ausol II 12,707 13,564 -6.3% M4 24,562 24,639 -0.3% 10.6 10.3 2.7% 7.2 7.1 1.9% 68.4% 68.9% -114 66% Algarve 6,824 7,260 -6.0% 17.4 19.1 -9.0% 14.9 16.3 -8.9% 85.6% 85.5% -149 85% Azores 7,719 8,148 -5.3% 10.1 10.4 -3.6% 1.1 8.5 n.s. 10.8% 81.7% -330 89% Financial assets Autema 44.5 43.0 3.5% 39.4 57.9 -31.9% 88.7% 134.8% -669 76% M3 10.4 9.8 6.9% 7.9 7.3 7.9% 75.6% 74.9% -203 95% Norte Litoral 32.5 21.8 49.2% 29.0 18.6 55.5% 89.2% 85.6% -200 84% Via Livre 6.4 8.3 -23.0% 0.4 2.8 -87.2% 5.6% 34.0% 8 84% Equity accounted Jun-13 Jun-12 Chg. Jun-13 Jun-12 Chg. Jun-13 Jun-12 Chg. Jun-13 Jun-12 Jun-13 Share 407 ETR (VKT) 1,103,360 1,106,661 -0.3% 277.4 264.2 5.0% 234.2 218.1 7.4% 84.4% 82.5% -3,867 43% Intangible assets Indiana Toll Road 25,765 25,447 1.2% 74.0 70.8 4.5% 55.9 56.9 -1.7% 75.5% 80.3% -2,899 50% Central Greece 17,275 18,029 -4.2% 3.8 3.9 -3.2% -0.7 0.0 n.s. -19.4% 0.5% -240 33% Ionian Roads 26,253 28,380 -7.5% 26.3 27.5 -4.3% 8.3 13.5 -38.6% 31.4% 49.0% 12 33% Serrano Park 2.6 2.4 11.9% 1.6 1.2 30.8% 59.6% 50.9% -48 50%
  3. 3. Results January-June 2013 3 TRAFFIC PERFORMANCE (cont.) At the ETR-407 traffic remains flat, -0.3% when compared to the same period last year. In North America, in spite of the significant increase in tariffs applied last 1st of January, traffic on the Chicago Skyway has been more robust than expected, especially in terms of heavy vehicles. In accordance with the contract, the weighted average increase in tariffs was 17.5%, with a 14% rise in the case of light vehicles and 25% for heavy vehicles. On the Indiana Toll Road there was a notable (+2.7%) increase in heavy vehicle traffic on the ticket section of the motorway (the latest accounts for more than 60% of the total revenues of the Highway). On the SH-130, which opened to traffic in October 2012 and where there are thus no comparables, traffic is much heavier on the southbound carriageway and on the days prior to a public holiday. On 1 April the Texan administration (TxDOT), in an attempt to promote the usage of the different segments of the toll road, introduced a discount rate for heavy vehicles, which will pay the same tariff as light vehicles for a period of one year. The TxDOT will pay the concessionaire a compensation for the revenues loss. After the discount came into effect, heavy vehicle traffic jumped by 33% in June vs. March. FINANCIAL ASSETS In the application of IFRIC 12, concession contracts are classified as one of two types: intangible assets or financial assets. Intangible assets (the operator assumes the traffic risk) are those where remuneration consists of the right to collect the tariffs corresponding to the degree of utilization. Financial assets, are those concession agreements where the remuneration consists of an unconditional contractual right to receive cash or other financial assets, either because the entity awarding the contract guarantees the payment of determined amounts, or because the entity guarantees that the deficit between the amounts received from the users of the public service and the said determined amounts. These are thus concession agreements where the demand risk is assumed by the entity awarding the contract. The financial assets in operation managed by Cintra are Norte Litoral, Eurolink M3, Autema and Via Livre. Assets under development ASSETS UNDER CONSTRUCTION Global consolidation Invested Capital Pending committed capital Net Debt 100% Share Intangible assets NTE 123 56 -506 57% LBJ 172 88 -781 51% Equity accounted Financial assets ETR-East 0 11 -93 50% NTE: the project is on schedule, with 62% of the construction complete, and it is expected to be finished in 2015. LBJ: the project is on schedule, with 59% of the construction complete, and it is expected to be finished in 2015. 407 East: construction works started in the first week of March and are expected to be completed in 2015. The credit rating agencies DBRS and S&P have affirmed the project’s rating at A- with stable outlook. CONTRACT AWARDS - NTE Extension: on 4 March 2013, the parties concerned signed the contract for the design, construction, financing and operation of the new section (NTE 3A-3B). The total estimated investment amounts to USD1,380mn, the concession has a life of 43 years from the date it opens to traffic, expected to be mid-2018. The project includes section 3A (10.5km); the junction with the 1-35W and the IH-820; and section 3B (5.8km). This project consists of remodelling the existing carriageways, which will be non-toll, and the construction of two additional “managed lanes” with electronic tolls, as well as the operation and maintenance of the whole roadway. Cintra will be responsible for the construction of section 3A and the junction, which will be built by Ferrovial Agromán and Webber, as well as for the operation and maintenance of the two segments. The TxDOT will be in charge of the construction of section 3B. The consortium includes Cintra, Meridiam Infrastructure and the Dallas Police and Fire Pension System; financing is expected to be closed during the third quarter of this year. - A66 Benavente-Zamora: this contract was awarded to Cintra in December 2012 and is in the process of closing the financing. Contracts out to tender In spite of the uncertainty in the markets, there has been a slight recovery in public authority development activity in some of Ferrovial’s target international markets, principally North America, Europe, Australia and Latin America. In Europe, Cintra as part of a consortium with AMEY Ventures, Uberior (Lloyds Bank infrastructure fund) and Meridiam, last 8 July submitted a bid for the “M8 M73 M74 Highway Improvements”. The consortium of which Cintra is a member had been selected for the BAFO phase at the beginning of this year. This is a project under the Availability Payment scheme in Scotland (UK). Once the bids have been presented, the contract is expected to be awarded in mid-August this year. In Canada, Infrastructure Ontario published a “Request For Qualification” on 25 March 2013 for the 407East Extension Phase II project. The consortium formed by Cintra and Ferrovial Agromán presented its response to the RFQ on 6 June, and is expecting Infrastructure Ontario to announce the list of pre-qualified bidders for the RFP in July/August 2013. The project comprises the design, construction, financing and maintenance of approximately 33km of motorway.
  4. 4. Results January-June 2013 4 Assets under creditor protection Traffic Revenues EBITDA EBITDA Margin Net Debt 100% Global consolidation Jun-13 Jun-12 Chg. Jun-13 Jun-12 Chg. Jun-13 Jun-12 Chg. Jun-13 Jun-12 Jun-13 Share Intangible assets Ocaña-La Roda 2,505 2,894 -13.4% 5.3 6.0 -11.9% 0.5 2.1 -76.5% 9.5% 35.7% -538 54% Radial 4 4,290 5,334 -19.6% 6.0 7.1 -14.8% 2.5 2.5 -1.8% 41.1% 35.6% -593 55% RADIAL 4 On 14 September 2012, the Board of the Radial 4 agreed to request protection from its creditors through the courts. On 4 October, this request for voluntary creditor protection was granted. Ferrovial’s investment relating to this project is fully provisioned, such that the resolution of the creditor protection situation should have absolutely no negative impact whatsoever on the group’s accounts. As a result of filing for creditor protection, the stand-still agreements with the lending banks were terminated. OCAÑA - LA RODA The Ocaña-La Roda toll road filed for creditor protection on 19 October 2012. On 4 December the courts accepted the request. Ferrovial’s investment in this project is provisioned in full, and it does not expect there to be any negative impact whatsoever on its accounts from the resolution of the creditor protection situation. The creditor protection filing triggered the early expiration of the financing contract, which matured on 31 December 2012.
  5. 5. Results January-June 2013 5 407-ETR PROFIT AND LOSS ACCOUNT CAD Jun-13 Jun-12 Chg (%) Revenues 371.9 344.9 7.8 EBITDA 314.0 284.7 10.3 EBITDA Margin 84.4% 82.5% EBIT 284.1 255.3 11.3 EBIT Margin 76.4% 74.0% Financial results -110.0 -153.8 28.5 EBT 174.1 101.5 71.6 Corporate income tax -46.0 -28.9 -59.3 Net Income 128.1 72.6 76.5 Net Income attributable to Ferrovial 55.4 31.4 76.5 Contribution to Ferrovial equity accounted result (€) 34.7 17.4 99.4 NB: since Ferrovial’s sale of 10% of the concession in 2010, the toll road is consolidated by the equity method as a reflection of Ferrovial’s stake in the concession (43.23%). 407ETR achieved significant revenue (+7.8%) and EBITDA (+10.3%) growth in local currency terms. This performance was a reflection of a combination of the tariff increases on 1 February, solid traffic and improved efficiency. Average revenue per trip increased by 8.7% vs. 2012. The financial result also improved significantly vs. last year thanks to the lower level of inflation, which had a positive impact on the inflation- indexed bonds. 407ETR made a contribution to Ferrovial’s equity method results of EUR34.7mn after annual depreciation of the goodwill generated on the sale of 10% of the concession in 2010, which is amortized over the life of the asset as a function of expected traffic. DIVIDENDS On 14 February, the Board of 407 International approved the payment of an ordinary dividend of CAD0.129/share, totaling CAD100mn. On 24 April, the Board of 407 International the payment of an ordinary dividend of CAD0.168mn per share, or a total of CAD130.0mn. After the close of the quarter, and coinciding with the publication of its results, the toll road announced and distributed a third payment of CAD200mn. CAD mn 2013 2012 Q1 100.0 87.5 Q2 130.0 87.5 Q3 200.0 87.5 Q4 337.5 Total 430.0 600.0 TRAFFIC Traffic growth was stable (-0.3%) after the normalization of the negative calendar effect in the first quarter (-1.5%), thanks to the combination of an improvement in the average distance travelled (+0.7%) and a slight decline in the number of vehicles (-1.0%). NET DEBT The motorway’s net debt at 30 June reached CAD5,295mn. On 10 June, 407ETR issued CAD200mn. This issue matures on 11 September 2052 and has a coupon of 3.98%. After this issue, more than 30% of the motorway’s debt has a maturity of more than 25 years. The company has no significant debt maturities until 2015 (CAD500mn) and 2016 (CAD208mn). At 30 June 2013, the average cost of 407ETR’s external borrowings was 5.1%, taking into account all its interest-rate, foreign-exchange and inflation hedges. CREDIT RATING S&P: "A" (Senior debt), "A-" (Junior debt) and "BBB" (Subordinated debt). DBRS: "A" (Senior debt), "A low" (Junior debt) and "BBB" (Subordinated debt). TARIFFS The table below compares the tariffs in 2012 and 2013 (increase on 1 February) applicable to light vehicles: CAD 2013 2012 Regular Zone Peak Period Monday-Friday: 6am-7am, 9am-10am, 3pm-4pm, 6pm-7pm Peak Hours Monday-Friday: 7am-9am, 4pm-6pm 26.20¢ /km 27.20¢ /km 24.20¢ /km 25.20¢ /km Light Zone Peak Period Monday-Friday: 6am-7am, 9am-10am, 3pm-4pm, 6pm-7pm Peak Hours Monday-Friday: 7am-9am, 4pm-6pm 24.90¢ /km 25.85¢ /km 22.60¢ /km 23.55¢ /km Midday Rate Weekdays 10am-3pm 22.70¢/km 21.00¢/km Midday Rate Weekends & public holidays 11am-7pm 21.00¢/km 19.35¢/km Off Peak Rate Weekdays 7pm-6am, Weekends & public holidays 7pm-11am 19.35¢/km 19.35¢/km Transponder: Monthly rental $3.25 $3.00 Transponder: Annual rental $21.50 $21.50 Video toll per journey $3.80 $3.80 Cargo per journey (This is not a charge per km.) $0.70 $0.60
  6. 6. Results January-June 2013 6 SERVICES New organisational structure The reported information reflects the new organisational structure of the Services division, which includes grouping the business units by geographical areas: Spain, the UK and International. In the cases of Spain and the UK, the structure for each country includes all the activities carried out in these countries. Spain will be managed under the Ferrovial Servicios brand, and the UK under the Amey brand. International includes all other countries. At present it comprises Portugal, Poland, Chile and Qatar. Results Jun-13 Jun-12 Chg.(%) LfL (%) Revenues 1,680.7 1,456.5 15.4 17.7 EBITDA 137.7 143.2 -3.8 7.6 EBITDA Margin 8.2% 9.8% EBIT 75.2 89.7 -16.2 1.6 EBIT Margin 4.5% 6.2% Backlog* 15,592.3 12,783.9 22.0 25.7 *Backlogs compared with December 2012. The H1 2013 Services account includes three months of Enterprise and six of Steel Ingeniería Chile, both companies acquired this year. Enterprise revenues contribution was EUR254.1mn and EBITDA reached EUR12.1mn. Steel revenues contribution was EUR21.2mn, and EBITDA for EUR4.5mn. The accounts also reflect the acquisition costs of Enterprise (EUR5.4mn) and those derived from its integration into Amey (EUR6.9mn) and reorganization costs in Spain (EUR2.3mn). The Like for like variation shows the performance vs 1H2012, excluding acquisition and integration costs, and the forex impact. Spain Jun-13 Jun-12 Chg. (%) LfL (%) Revenues 702.2 704.6 -0.3 -0.3 EBITDA 95.2 97.8 -2.6 -0.4 EBITDA Margin 13.6% 13.9% EBIT 50.8 54.8 n.s. -3.2 EBIT Margin 7.2% 7.8% Backlog* 5,659.6 5,219.4 8.4 A new plan to integrate all the activities in Spain under the same business unit was launched at the beginning of the year. This brand new organisation will provide overhead savings and a more efficient delivery to ours clients. The costs from this new organisation plan reached EUR2.3mn up to June. Like for Like variation excludes this impact. The forecasted cost for the full year is expected to be EUR6mn. Revenues were stable in spite of the weakness of the Spanish economy, principally due to the contribution made by new infrastructure maintenance contracts awarded in the latter months. In this context, the start of operations on new maintenance contracts are to be highlighted, such as health centres in the Madrid region, Orense Hospital, Telefónica’s data processing centre, or the handling of telephone enquiries for the Madrid local authority. The contribution from those new contracts offset the decreases in tonnes processed (6.6% lower than in the same period in 2012). The like for like EBITDA performance is in line with revenues. In both years, EBITDA includes reversals of provisions for overdue receivables now cashed in amounting to EUR8mn. United Kingdom The entity resulting from the merger of Amey and Enterprise operates in four business areas: Government, Consulting & Rail, Built Environment and Utilities & Defence. With revenues of more than GBP2bn, Amey covers a wide range of services to utilities, highway and rail maintenance, waste management and facility management. The same day the acquisition was closed, a new management team was appointed. Its principal challenge is to lead the integration process, in order to achieve the target of recurrent synergies estimated to arise on the integration. These first three months have confirmed the strategic sense of the acquisition, as well as the estimated target for synergies (GBP40mn from 2015, at a non-recurrent cost of GBP40mn in the next two years). From the commercial point of view, one of the principal objectives has been to try and ensure a controlled transition, avoiding any negative impact to either clients or, of course, the public. In these first few months management has visited a significant number of the most important projects and clients to present the new organisation. UK PERFORMANCE Jun-13 Jun-12 Chg.(%) LfL (%) Revenues 943.4 740.9 27.3 32.3 EBITDA 38.5 44.7 -13.8 18.2 EBITDA Margin 4.1% 6.0% EBIT 23.5 35.1 -33.0 6.1 EBIT Margin 2.5% 4.7% Backlog* 9,743.8 7,467.6 30.5 37.5 Amey’s 1H13 accounts include three months of Enterprise. It also includes the acquisition (EUR5.4mn) and integration (EUR6.9mn) costs incurred up to June. The Like for like variation shows the performance vs 1H2012, excluding these costs. The growth of revenues is due mainly to Enterprise (EUR254.1mn). Excluding this contribution from Enterprise, revenues were a 3.3% lower than 1H2012, mainly because of the impact of the one-off works carried out in 2012 related to the Olympic Games. At EBITDA level, Enterprise contributes with EUR12.1mn, before integration and acquisition costs (EUR12.3mn). Amey generated a non-recurrent profit of EUR6.6mn in 2012 derived from the agreement with the defined benefit pension funds to limit the future rights of the participants in those funds. Adjusting for the above, Amey’s performance on its contracts vs. 2012 was positive. The EBIT includes the amortisation of the goodwill arising on the acquisition of Enterprise. This goodwill basically reflects the value of the
  7. 7. Results January-June 2013 7 contracts in Enterprise’s portfolio at the time of the acquisition. The annual amortisation of this is expected to amount to GBP10.6mn in the first year (EUR2.6mn to June). International Jun-13 Jun-12 Chg.(%) LfL (%) Revenues 35.1 11.1 216.9 216.9 Backlog* 188.9 96.9 94.9 This new business unit includes the infrastructure maintenance and environmental services in countries other than Spain and the UK. The breakdown of revenues by country is as follows: Chile (EUR21.2mn), Portugal (EUR10.9mn) and Poland (EUR2.8mn). Backlog Enterprise’s backlog of EUR2,509mn to June has been incorporated into the division’s second quarter figures. There were some very important contract awards during the first half of the year, both in Spain and in the UK, taking the Services backlog to record highs. The principal contract awards during the second quarter include the maintenance of public spaces in four Madrid districts (eight years, EUR307mn), waste treatment in Alicante (25 years, EUR284mn) and cleaning services for health centres in the Community of Madrid (three years, EUR29mn). In Spain, it’s worth to mention different energy efficiency contracts, with a total value in backlog of EUR162mn. All those contracts share their common view on the significance of energy savings, up to 35% of global consumption by applying innovative technical solutions. In the UK, contracts to be noted are the design, construction and operation of a waste treatment complex in Milton Keynes (18 years, EUR137mn); maintenance of public buildings in three districts of London, Chelsea, Kensington and Hammersmith & Fullham (5 years, EUR182mn); street maintenance and highway cleaning in Liverpool (9 years, EUR132mn); and waste collection in Northamptonshire (7 years, EUR90mn). In the International segment, which has doubled its size, the most significant impacts on the backlog in the year to date have been the incorporation of Steel Ingeniería’s backlog (EUR46.4mn), the renewal of the waste collection contract for Planalto Beirao in Portugal (nine years) and various contracts for highway maintenance and facility management in Poland. Corporate activity SALE OF AMEY’S PFIs In March, Ferrovial Servicios closed the sale of 40% of the companies that execute long-term PFI contracts for GBP37mn to the Dutch investment fund DIF. Prior to this, Amey held a 50% stake that was consolidated by the equity method. After the sale, Amey has a 10% stake in these companies. The capital gain amounted to EUR20.4mn. ACQUISITION OF STEEL On 4 March, Ferrovial Servicios closed the acquisition of 70% of Steel Ingeniería, a company specialising in the mining sector in Chile, for EUR28.5mn (including EUR8.5mn as of debt), marking the entry into this new market. With this acquisition, Ferrovial Servicios initiates operations in Latin America and progresses its international expansion beyond the recent contract awards in Poland and Qatar, and the recent acquisition of Enterprise in the UK. ACQUISITION OF ENTERPRISE On 8 April, Ferrovial Servicios closed the acquisition of the British company Enterprise, after receiving the approval of the European competition authorities, for EUR473.9mn. Enterprise is one of the principal companies in the UK in the area of services to utilities and the public sector. With this acquisition, Ferrovial Servicios not only increases its turnover but also expands its product range in certain business areas. The merger of Enterprise into Amey will generate cost and revenue synergies estimated at around GBP40mn.
  8. 8. Results January-June 2013 8 CONSTRUCTION Jun-13 Jun-12 Chg. % Like-for-Like (%) Revenues 1,859.2 2,025.5 -8.2 -7.8 EBITDA 154.5 161.4 -4.3 -4.0 EBITDA Margin 8.3% 8.0% EBIT 139.8 141.2 -1.0 -0.7 EBIT Margin 7.5% 7.0% Backlog* 8,102.4 8,699.4 -6.9 -6.1 *Backlogs vs. December 2012. The contraction in activity (-7.8% in comparable terms) continues the trend seen in the last few years: a significant drop in business in Spain, offset by growth in international markets, principally the US. International turnover in the first half of the year represented 75% of the Division’s revenues. In the first half of 2013, there was also a significant decline in activity in Poland after the completion of some important infrastructure contracts, which have not been replaced by new contracts due to the drop in highway contracts put out to tender in the last year. EBITDA was 4.0% weaker in comparable terms. Budimex Jun-13 Jun-12 Chg. % Like-for-Like (%) Revenues 475.9 687.5 -30.8 -30.8 EBITDA 18.3 30.5 -40.1 -40.1 EBITDA Margin 3.8% 4.4% EBIT 14.8 23.8 -38.0 -37.9 EBIT Margin 3.1% 3.5% Backlog* 1,249.1 1,193.9 4.6 10.9 The period was marked by the completion of large projects and the contraction in public-sector tendering in the preceding year, as well as by bad weather. The backlog reached EUR1,249mn, or an increase of 11% vs. December 2012, reflecting a change of trend in the award of new contracts. Awards of note include contracts for the construction of the Gdansk tramway and the Krzyz-Debica section of the A4 motorway. The change of trend in the level of contracts out to tender is supported by the approval of the EU budget, with Poland as the principal beneficiary of funds. Polish government has announced a new investment plan for roads for PLN30bn, which is expected to begin being tendered by the end of 2013. Webber Jun-13 Jun-12 Chg. % Like-for-Like (%) Revenues 347.5 276.4 25.7 26.7 EBITDA 18.7 11.3 64.8 66.3 EBITDA Margin 5.4% 4.1% EBIT 15.2 8.9 70.5 72.1 EBIT Margin 4.4% 3.2% Backlog* 1,181.7 1,288.3 -8.3 -9.6 Strong revenue growth in local currency terms (+27%), thanks to execution on the NTE and LBJ toll roads, with slightly higher returns than on the rest of the portfolio. The backlog fell (by 10% in local currency terms) due to the above- mentioned high level of execution, although it includes some notable highway projects such as the US-290 and the I-10. Ferrovial Agromán Jun-13 Jun-12 Chg. % Like-for-Like (%) Revenues 1,035.8 1,061.6 -2.4 -1.9 EBITDA 117.5 119.5 -1.7 -1.4 EBITDA Margin 11.3% 11.3% EBIT 109.8 108.5 1.2 1.5 EBIT Margin 10.6% 10.2% Backlog* 5,671.5 6,217.2 -8.8 -8.5 Revenues (-1.9%) reflect the combination of performance in the Spanish market (-25%), with notable declines in civil works in particular, driven by the cuts in public-sector contracting (-45% in 2012). These cuts in the Spanish market were offset by the strong contribution from international markets, especially the US, for works related to new toll roads in Texas, as well as projects in the UK (CrossRail) and Canada (407 East Extension). Profitability was stable vs. the previous year, as a combination of the margins generated on the US projects and the reversal of provisions on completion of projects, which were not offset by provisions made on the start of new projects. Backlog Jun-13 Dec-12 Chg. % Civil work 6,451.2 6,837.4 -5.6 Residential work 186.4 284.2 -34.4 Non-residential work 752.3 867.2 -13.3 Industrial 712.4 710.6 0.3 Total 8,102.4 8,699.4 -6.9 The backlog contracted 6.9% vs. December 2012, as the high level of execution was not matched by new contract awards. The figure for the backlog does not yet include the contract for the NTE extension (approximately EUR760mn), which will not be included until the financing for the project is closed. Ferrovial’s ability to undertake complex projects, such as the LBJ and NTE toll roads in Texas, has resulted in the group being a reference the US market. The international backlog amounts to EUR5,647mn, much higher than the domestic backlog (EUR2,455mn, -7%). The international backlog represents c.70% of the total.
  9. 9. Results January-June 2013 9 AIRPORTS HAH’s contribution to Ferrovial’s equity-accounted result reached EUR140.3mn, principally a reflection of the capital gain on the sale of Stansted Airport (EUR137.8mn). Note that the division’s net result excluding exceptional items was positive (+EUR2.2mn). HAH.- Traffic performance Heathrow traffic grew 2.4% vs. the same period last year. This positive traffic growth was a consequence of an acceleration of the trends noted earlier, with an increase in load-factors and the operation of larger aircraft. Occupancy levels reached 74.4% in the first half vs. 73.2% in 2012, and the average number of seats per flight reached 201.4 vs. 196.1 in 2012. The acquisition of bmi by British Airways made a notable contribution to the achievement of these results, as bmi’s former routes now have load-factors more in line with those of BA. European traffic was particularly supportive, with an increase of 4.9% in the first half. Long-haul traffic has increased in all regions except Africa. Middle East traffic growth was particularly robust (+4%), thanks to the increase in larger-capacity aircraft, driven by the expansion of airlines such as Emirates, Etihad and Saudi Airlines. Routes to North America, Latin America and Asia Pacific saw their rate of growth accelerate in the second quarter after capacity increases. Heathrow was nominated as the “best airport of 2013” in the ACI Europe Awards, in the category of airport with more than 25 million passengers. In addition, T5 had earlier been nominated as the best airport terminal in the world by “Skytrax World Airports Awards” for the second year running. Traffic growth by destination (ex-Stansted in both years): Jun-13 Jun-12 LfL (%) UK 5.6 5.6 1.0% Europe 16.4 15.8 4.2% Long Haul 18.1 18.0 0.8% Total 40.2 39.3 2.2% Tariffs The maximum aeronautical tariffs applicable to the 2012/2013 and 2013/2014 regulatory years came into effect on 1 April 2012 and 2013 respectively. The following table shows the increase in tariffs at Heathrow in April 2012 and 2013 which underpin the revenue growth in the first semester of 2013: 2013 2012 Regulation Heathrow +10.4% +12.7% RPI+7.5% GBP Traffic Revenues EBITDA EBITDA Margin Jun-13 Jun-12 Chg. Jun-13 Jun-12 Chg. Jun-13 Jun-12 Chg. Jun-13 Jun-12 Chg. (bps) Heathrow 34.4 33.6 2.4% 1,086 975 11.4% 575 474 21.3% 53.0% 48.6% 431 Heathrow express 60 58 4.8% 34 33 4.6% 56.7% 56.7% -6 Holding 0 1 -95.4% -3 6 n.s. Heathrow total 1,147 1,034 10.9% 607 513 18.2% 52.9% 49.6% 326 Glasgow 3.3 3.3 1.2% 42 40 3.9% 12 13 -3.5% 29.4% 31.7% -226 Aberdeen 1.6 1.6 2.0% 28 28 0.7% 10 10 3.3% 37.0% 36.1% 92 Southampton 0.8 0.8 -1.5% 12 12 -1.4% 3 3 -10.5% 24.0% 26.4% -244 Non Regulated 5.8 5.7 1.1% 82 80 2.0% 26 26 -1.8% 31.2% 32.4% -119 Adjustments 1 1 -15.2% 1 0 n.s. HAH total 40.2 39.3 2.2% 1,230 1,116 10.2% 633 540 17.3% 51.5% 48.4% 310
  10. 10. Results January-June 2013 10 Income statement GBP Jun-13 Jun-12 Chg. % LfL (%) Revenues 1,229.6 1,115.5 10.2 10.2 EBITDA 632.8 539.6 17.3 17.3 EBITDA margin % 51.5% 48.4% Depreciation 262.6 270.6 -2.9 -2.9 EBIT 370.2 269.0 37.6 37.6 EBIT margin % 30.1% 24.1% Financial results -490.0 -282.3 -73.6 16.8 EBT -119.8 -12.9 n.s. n.s. Corporate income tax 126.0 76.2 65.4 -120.1 Result from discontinued operations 349.5 174.9 99.9 -85.3 Net income (100%) 355.8 238.2 49.4 104.6 Contribution to Ferrovial equity accounted result (€) 140.3 145.0 -3.3 104.6 Revenue and EBITDA growth of 10.2% and 17.3% respectively, as a consequence of the 14.4% increase in aeronautical revenues, driven by tariff increases (+12.7% at Heathrow in April 2012) and the increase in passenger traffic (+2.4%); commercial revenues rose 4.8% and the Other revenues element by 4.2%. The deterioration in the financial result vs. June 2012 was principally a consequence of the drop in the market value of Heathrow’s derivatives portfolio, particularly its inflation hedges (-GBP133mn vs. +GBP147mn in 2012), with no cash impact, after the increase in expectations of future inflation in the UK vs. December 2012. Nevertheless, the performance of this variable in the second quarter had a positive impact on the market value of the portfolio, which showed a loss of GBP422mn in the first quarter. At 30 June 2013, the average cost of Heathrow’s external borrowings was 5.86%, taking into account all its interest-rate, foreign-exchange and inflation hedges. Revenue breakdown GBP Jun-13 Jun-12 Chg. % LfL (%) Aeronautic 736.2 643.3 14.4 14.4 Retail 252.8 241.3 4.8 4.8 Others 240.7 231.0 4.2 4.2 TOTAL 1,229.6 1,115.5 10.2 10.2 Aeronautic. Retail Other GBP Jun-13 LfL (%) Jun-13 LfL (%) Jun-13 LfL (%) Heathrow 692.6 15.5 229.5 4.9 224.8 4.1 Glasgow 20.9 2.6 13.3 3.9 7.3 7.6 Aberdeen 15.1 -5.2 5.9 9.0 7.1 8.2 Southampton 7.6 1.0 3.5 -7.7 1.2 3.4 Other & adjustments 0.6 -1.6 0.3 -32.4 Total airports 736.2 14.4 252.8 4.8 240.7 4.2 Aeronautical revenues increased by 15.5% at Heathrow, as a reflection of the combination of traffic growth (+2.4%) and the tariff increases in April 2012 (+12.7%) and 2013 (+10.4%). Average aeronautical revenues per passenger increased 13% to GBP20.15 (vs. GBP17.83 in 2012). In addition, in the second quarter of 2013 growth included a recovery through the “k factor” for the lower actual tariff revenues in 2011/2012. Retail revenues (+4.8%). Retail revenue growth continued the same positive trend seen in previous years. At Heathrow, commercial revenues increased 4.9%. Net retail revenues per passenger reached GBP6.22, or an increase of 1.9%. Net retail revenues per passenger were probably affected by the higher proportion of European traffic, which has traditionally had a lower propensity to spend money at Heathrow’s retail outlets. Regulatory aspects REGULATORY ASSET BASE (RAB) The increase in the RAB to GBP13,985mn in 2013 (vs. GBP13,471mn in December 2012) reflects the investments made (GBP650mn) and inflation (GBP160mn), offset by depreciation in the period (GBP290mn) and a small amount for profiling and changes to the consolidation perimeter (GBP6mn). DEFINITION OF THE DEVELOPMENT OF HEATHROW AIRPORT FOR THE NEXT FIVE YEARS After Heathrow’s publication of its Full Business Plan in January, On 30 April 2013 the CAA published Initial Proposals proposing price controls and a draft licence. The CAA proposes that the maximum allowable yield per passenger will increase by RPI minus 1.3% per year; compared to Heathrow's Full Business Plan of RPI plus 5.9%. On 25 June 2013 Heathrow submitted a Revised Business Plan in line with the CAA's Initial Proposals and based on a reduced GBP2bn capital investment plan. The revised capital plan aims to sustain and selectively enhance the passenger experience, rather than deliver more noticeable passenger experience and resilience improvements previously planned. On 19 July 2013 Heathrow submitted to the CAA its Alternative Business Plan. This provided updates to the original Full Business Plan, including a refined GBP3bn capital plan, GBP427mn of operational savings, a slightly higher passenger forecast, and a revised profile for the maximum allowable yield per passenger of RPI plus 4.6% per year. Delivery of the Alternative Business Plan by Heathrow is conditional on fair and reasonable final proposals from the CAA. The CAA will publish its final proposals for consultation on 4 October 2013 with the publication of the final Q6 determination expected on 9 January 2014.
  11. 11. Results January-June 2013 11 AIRPORTS COMMISSION The UK government has formed the Airports Commission, chaired by Sir Howard Davies, to determine how to maintain the UK's status as an international hub for aviation. The Commission has been established to assess options for meeting the UK's international connectivity needs, recommend the optimum approach and to ensure any need is met as expeditiously as practicable. There is a compelling case for growth at Heathrow and on 17 July 2013, Heathrow submitted options for a third runway to be located to the north- west, south-west or north of the existing airport; all three options have been designed to evolve to four runways if required. A third runway at Heathrow is the fastest, most cost effective and most practical route to meeting the UK's international connectivity needs. A third runway could increase Heathrow's capacity to 740,000 flights and 130 million passengers per year. A third runway can be delivered for less cost than building a new hub airport. The options are estimated to cost between £14 billion and £17 billion, of which approximately £9-11 billion relates to the development of the airport infrastructure, and £5-7 billion relates to surface access, environmental and community funding. The development of the airport infrastructure would deliver a third runway, additional taxiways, further passenger terminal capacity and connectivity with the existing infrastructure including track transit and baggage infrastructure. The Commission is expected to produce an interim report by the end of 2013 and to report its full findings in summer 2015. However, the lead times to implement any recommendations in terms of new runways are expected to be significant even if immediate political consensus in support of the recommendations is achieved. Net debt GBP Jun-13 Dec-12 Chg. % Senior loan facility 588.4 587.7 0.1% Subordinated 753.0 717.0 5.0% Securitized Group 10,884.9 11,315.2 -3.8% Non-Securitized Group 329.1 337.2 -2.4% Other & adjustments -346.4 -26.2 n.s. Total 12,209.0 12,931.0 -5.6% Dividends In the first half of 2013, HAH paid dividends amounting to GBP128mn. In 2012, HAH paid dividends of GBP240mn. Disposals SALE OF STANSTED AIRPORT The sale process initiated in August 2012 was concluded on 18 January with the announcement of the sale of Stansted Airport to MAG (Manchester Airport Group) for GBP1,500mn (EBITDA 2012 GBP94mn, RAB 2012 GBP1,343mn). The deal was closed on 28 February, contributing capital gains of GBP353mn (100%) or EUR137.8mn to Ferrovial’s net result.
  12. 12. Results January-June 2013 12 CONSOLIDATED INCOME STATEMENT Before Fair value Adjustments Fair value Adjustments Jun-13 Before Fair value Adjustments Fair value Adjustments Jun-12 Revenues 3,758 3,758 3,656 3,656 Other income 5 5 8 8 Total income 3,762 3,762 3,664 3,664 COGS 3,348 3,348 3,225 3,225 EBITDA 415 415 439 439 EBITDA margin 11.0% 11.0% 12.0% 12.0% Period depreciation 113 113 106 106 EBIT (ex disposals & impairments) 302 302 333 333 EBIT margin 8.0% 8.0% 9.1% 9.1% Disposals & impairments 21 21 EBIT 323 323 333 333 EBIT margin 8.6% 8.6% 9.1% 9.1% FINANCIAL RESULTS -220 33 -186 -195 -18 -212 Financial result from financings of infrastructures projects -169 -169 -141 -141 Derivatives, other fair value adjustments & other financial result from infrastructure projects -3 9 6 -4 -2 -6 Financial result from financings of other companies -30 -30 -17 -17 Derivatives, other fair value adjustments & other financial result from Other companies -18 24 7 -33 -15 -48 Equity-accounted affiliates 213 -32 181 97 71 168 EBT 316 2 317 235 54 288 Corporate income tax -41 -9 -51 -43 5 -38 Net Income from continued operations 274 -8 267 191 59 250 Net income from discontinued operations CONSOLIDATED NET INCOME 274 -8 267 191 59 250 Minorities 21 0 20 5 1 6 NET INCOME ATTRIBUTED 295 -8 287 197 60 257
  13. 13. Results January-June 2013 13 REVENUES Jun-13 Jun-12 Chg. % Like-for-Like (%) Construction 1,859.2 2,025.5 -8.2 -7.8 Toll Roads 206.2 186.4 10.6 10.8 Services 1,680.7 1,456.5 15.4 17.7 Others 11.5 -12.6 n.s. Total 3,757.7 3,655.8 2.8 3.8 EBITDA Jun-13 Jun-12 Chg. % Like-for-Like (%) Construction 154.5 161.4 -4.3 -4.0 Toll Roads 125.1 150.8 -17.0 -17.0 Services 137.7 143.2 -3.8 7.6 Others -2.7 -16.6 n.s. Total 414.6 438.7 -5.5 -1.6 DEPRECIATION Increase of a 6.9%, in comparable terms, over the same period last year, reaching EUR113mn. EBIT (before impairments and disposal of fixed assets) Jun-13 Jun-12 Chg. % Like-for-Like (%) Construction 139.8 141.2 -1.0 -0.7 Toll Roads 91.0 119.7 -24.0 -23.9 Services 75.2 89.7 -16.2 1.6 Others -4.3 -18.0 n.s. Total 301.7 332.6 -9.3 -4.2 *For analytical purposes, all references to EBIT are before impairments and asset disposals. IMPAIRMENTS AND DISPOSAL OF FIXED ASSETS This heading includes the capital gain (EUR20mn) on the sale of the Amey joint ventures. NET FINANCIAL EXPENSES Jun-13 Jun-12 Chg. % Infra projects -168.9 -141.2 -19.6 Other -30.3 -17.0 -78.3 Net financial result (financing) -199.2 -158.1 -25.9 Infra projects 6.3 -5.9 n.s. Other 6.6 -48.4 113.7 Derivatives, other fair value adjustments & other financial result 12.9 -54.3 123.7 Financial Result -186.3 -212.4 12.3 The financial result improved by 12.3%, reflecting the combination of: The financing result deteriorated 26%. This was principally due to the increase in financial expenses on infrastructure projects due to the higher level of debt, principally associated with the projects coming into operation (SH-130). Financial expenses also increased at the other companies, principally due to the accelerated amortization of the origination fees of the bank loans repaid after the bond issuances. (EUR16million). The financial result on derivatives and others is determined by the impact of the improvement in Ferrovial’s share price on the derivatives contracts covering share option schemes. EQUITY ACCOUNTED RESULTS Jun-13 Jun-12 Chg. % Construction -0.7 -0.3 n.s. Services 6.4 6.4 -0.8 Toll Roads 34.9 17.0 105.2 Airports 140.3 145.0 3.3 Total 180.9 168.1 -7.6 The companies consolidated by the equity method made a contribution of EUR181mn (vs. EUR168mn in 2012). This was principally a reflection of the contribution from the 407ETR toll motorway (EUR35mn) and HAH (EUR140mn), the latest mainly due to the capital gain on the sale of Stansted airport (EUR138mn). CORPORATE INCOME TAX Corporate tax rate reached 37%, excluding results from equity accounted affiliates. NET RESULT Net profit reached EUR287mn (vs. EUR257mn in 2012).
  14. 14. Results January-June 2013 14 BALANCE SHEET AND OTHER MAGNITUDES Jun-13 Dec-12 FIXED AND OTHER NON-CURRENT ASSETS 17,523 16,638 Consolidation goodwill 1,907 1,487 Intangible assets 222 116 Investments in infrastructure projects 7,346 6,755 Property 39 35 Plant and Equipment 527 507 Equity-consolidated companies 4,115 4,304 Non-current financial assets 1,681 1,668 Receivables from Infrastructure assets 1,320 1,334 Financial assets classified as held for sale 1 1 Restricted Cash and other non-current assets 152 148 Other receivables 208 186 Deferred taxes 1,499 1,609 Derivative financial instruments at fair value 187 158 CURRENT ASSETS 5,091 5,580 Assets classified as held for sale 2 2 Inventories 396 394 Trade & other receivables 2,640 2,204 Trade receivable for sales and services 1,865 1,647 Other receivables 648 437 Taxes assets on current profits 127 120 Cash and other financial investments 2,025 2,971 Infrastructure project companies 276 237 Restricted Cash 29 25 Other cash and equivalents 247 212 Other companies 1,750 2,734 Derivative financial instruments at fair value 28 8 TOTAL ASSETS 22,614 22,217 EQUITY 5,932 5,762 Capital & reserves attributable to the Company´s equity holders 5,678 5,642 Minority interest 254 121 DEFERRED INCOME 419 356 NON-CURRENT LIABILITIES 11,404 11,117 Pension provisions 91 105 Other non current provisions 1,370 1,166 Financial borrowings 7,359 6,996 Financial borrowings on infrastructure projects 6,144 5,825 Financial borrowings other companies 1,215 1,171 Other borrowings 209 203 Deferred taxes 1,168 1,080 Derivative financial instruments at fair value 1,207 1,567 CURRENT LIABILITIES 4,859 4,982 Financial borrowings 1,279 1,229 Financial borrowings on infrastructure projects 1,197 1,168 Financial borrowings other companies 82 61 Derivative financial instruments at fair value 67 65 Trade and other payables 3,163 3,272 Trades and payables 2,586 2,648 Deferred tax liabilities 125 75 Other liabilities 453 549 Trade provisions 350 415 TOTAL LIABILITIES & EQUITY 22,614 22,217
  15. 15. Results January-June 2013 15 Consolidated net debt The net cash position excluding infrastructure projects fell vs. December 2012, to EUR427mn. After investing EUR604mn in the first half (mainly the purchase of Enterprise in April for EUR474mn), paying the complementary dividend on 23 May (EUR0.25/share) totaling EUR183mn and the payment in January 2013 of the withholding tax corresponding to the dividend paid on account in December 2012 (EUR85mn). The net project debt reached EUR6,886mn. The variation was principally a reflection of the investments made in the toll roads under construction in the US. This net debt includes EUR1.287mn related to toll roads under construction (the NTE and the LBJ). It also includes EUR1.131mn related to the radial motorways (R4 and OLR) which are have sought creditor protection. Group net debt reached EUR6,460mn. Jun-13 Dec-12 NCP ex-infrastructures projects 426.6 1,488.1 Toll roads -6,537.7 -6,238.1 Others -348.5 -356.5 NCP infrastructures projects -6,886.2 -6,594.6 Net Cash Position -6,459.6 -5,106.5 Corporate credit rating In August 2011, the rating agencies S&P and Fitch Ratings rated Ferrovial for the first time, in both cases as “Investment-grade”. Standard&Poor’s upgraded Ferrovial’s rating from BBB- a BBB on 9 May 2013. Agency Rating Outlook S&P BBB Stable FITCH BBB- Stable Corporate bond issuance Ferrovial has issued two corporate bonds in 2013. In January it made its inaugural issue which was very well-received by the market and was 11x over-subscribed. The EUR500mn issue has a five-year maturity and was closed at a Price of midswap +240bp, with a coupon of 3.375%. On 28 May Ferrovial issued a second bond which once again attracted a high level of interest and was 6x over-subscribed. The EUR500mn issue has an eight-year maturity and closed at a Price of midswap +200bp, with a coupon of 3.375%. In both cases the funds obtained have been applied to the early retirement of corporate debt. With these two issues, Ferrovial has managed to optimize its debt maturity calendar and has significantly reduced its bank debt. Year Corporate debt maturity 2013 61 2014 30 2015 150 2016 20 2017 11 2018 501 2019 0 2020 0 2021 - 2030 503 2031 - 2040 1 2041 - 2050 1
  16. 16. Results January-June 2013 16 CONSOLIDATED CASH FLOW Jun-13 Ex-infrastructure projects Infrastructure projects Adjustments Total EBITDA 242 173 415 Dividends received 139 -4 135 Working capital -519 -25 -544 Operating flow (before taxes) -138 147 -4 5 Tax payment -14 -7 -21 Operating cash flow -152 140 -4 -16 Investment -604 -375 55 -923 Divestment 46 66 112 Investment cash flow -558 -309 55 -811 Activity cash flow -710 -168 51 -827 Interest flow -13 -132 0 -145 Capital flow & Minorities 1 96 -55 42 Dividend payment -273 -3 4 -272 Forex impact -31 -44 0 -75 Deconsolidated Debt of assets cassified as held for sale Other (non-cash) -35 -39 -2 -76 Financing Cash Flow -352 -121 -54 -526 Net cash variation -1,062 -289 -2 -1,353 Net cash initial position 1,488 -6,618 24 -5,107 Net cash final position 427 -6,907 21 -6,460 Jun-12 Ex-infrastructure projects Infrastructure projects Adjustments Total EBITDA 253 187 440 Dividends received 147 -13 135 Working capital -115 -17 0 -132 Operating flow (before taxes) 285 170 -13 443 Tax payment -15 -7 -21 Operating cash flow 271 164 -13 422 Investment -110 -363 56 -416 Divestment -9 43 34 Investment cash flow -119 -319 56 -382 Activity cash flow 152 -156 44 40 Interest flow -37 -139 -176 Capital flow & Minorities 0 102 -56 46 Dividend payment -202 -13 13 -202 Forex impact 40 -70 1 -30 Deconsolidated Debt of assets cassified as held for sale Other (non-cash) -14 -32 -1 -46 Financing Cash Flow -212 -152 -44 -408 Net cash variation -61 -307 -1 -368 Net cash initial position 907 -6,102 25 -5,171 Net cash final position 846 -6,409 24 -5,539
  17. 17. Results January-June 2013 17 Cash Flow Excluding Infrastructure Projects OPERATING FLOW Operating flows excluding infrastructure projects and by business area, 2013 vs. 2012 are shown in the following table: Operating flow Jun-13 Jun-12 Construction -191 -186 Services -28 348 Dividends from Toll roads 77 65 Dividends from Airports 50 75 Other -47 -16 Operating flow (before taxes) -138 285 Tax payment -14 -15 Total -152 271 The “Other” heading includes the flows from operations corresponding to the Corporate Centre and the Airports and Toll Roads parent companies. The significant variation in flows from operations in 2013 vs. 2012 is a reflection of the impact on 2012 of the payments received in the first half of the year totalling EUR683mn (EUR499mn in the Services division and EUR184mn in Construction) as part of the Supplier Payment Plan under Royal Decree 4/2012. A breakdown by business of the flows in the Construction and Services divisions is shown in the table below: Construction jun-13 jun-12 EBITDA 148 155 Settlement of provisions from completed works (non cash) -86 -70 Adjusted EBITDA 61 85 Factoring Variation 9 -63 Ex Budimex Working Capital -138 65 Budimex Working Capital -123 -273 Operating Cash Flow before Taxes -191 -186 Services jun-13 jun-12 EBITDA 114 124 Dividends from projects 12 7 Factoring Variation 0 -51 UK pension scheme payments -9 -21 UK Working Capital -79 -34 Ex UK Working Capital -66 322 Operating Cash Flow before Taxes -28 348 At the Toll Roads division, the 2013 operating flow includes EUR77mn of dividends and capital repayments from the motorway concession companies, as reflected in the table below: Dividends and Capital reimbursements jun-13 jun-12 ETR 407 74 55 Irish toll roads 3 11 Dividends 77 65 Spanish toll roads 1 Capital reimbursements 1 Total 77 65 INVESTMENT FLOW The following table shows the breakdown by business segment of the investment flows excluding infrastructure projects, distinguishing in each case between the amounts paid for investments made and the proceeds received from disposals. Jun-13 Investment Divestment Investment Cash Flow Construction -21 1 -20 Services -525 49 -476 Toll roads -56 -56 Airports -4 -4 Others -2 -2 Total -604 46 -558 Jun-12 Investment Divestment Investment Cash Flow Construction -14 3 -11 Services -37 -7 -44 Toll roads -56 0 -56 Airports 0 -18 -18 Others -2 13 11 Total -110 -9 -119 Highlights of the investment flows included the acquisition of the UK company Enterprise in the Services division for EUR474mn, as well as for of the Chilean company Steel Ingeniería, for EUR29mn, and also capital increases for infrastructure projects (US toll roads under construction) and in Services (Amey projects), as well as investment in material fixed assets, principally at the Services division. Equity investment in toll roads jun-13 jun-12 LBJ -34 -31 NTE -20 -17 NTE 3A&B -1 Spanish toll roads -1 -1 SH-130 -5 Other -2 Total -55 -56
  18. 18. Results January-June 2013 18 As regards disposals in 2013, Services sold 40% of Amey’s JVs for EUR44mn and also Ecocat for EUR5mn, which is offset by the EUR4mn of costs associated with the HAH disposals made the previous year, but paid in 2013. Also of note in 2012 was the outflow in January adjusting the sale price of Swissport in 2011 for tax contingencies (EUR7mn, in accordance with the sale agreements), and in Other, the sale of land in Valdebebas (Madrid) for EUR13mn. At the Airports division, outflows included the payment in 2012 of the costs associated with the disposal of 5.88% of HAH in 2011 (EUR18mn). FINANCING FLOW The financing outflow includes dividend payments, which in 2013 corresponded to the complementary dividend paid to Ferrovial, S.A. shareholders amounting to EUR183mn, and EUR11mn paid to the minority shareholders in Budimex. In addition, note that in January 2013, Ferrovial paid over the withholding tax on Dec-12 dividends, amounting to EUR85mn. Meanwhile, note that net interest payments amounted to EUR13mn, the negative impact of exchange-rate movements to EUR31mn and other non-cash debt movements including accounting changes in debt which have no impact on cash flow (-EUR35mn). The positive impact of the mark to market by the derivatives signed to cover the forex in the dividends pending to be received by the infrastructure projects are not included under this heading (EUR20mn). Cash Flow from Infrastructure Projects OPERATING FLOW The operating flows at the concession companies basically reflect inflows at the companies with projects already in operation, although it also includes VAT payments and refunds at those in the construction phase. The following table shows a breakdown of the cash flows from operations for infrastructure projects: Jun-13 Jun-12 Toll roads 114 118 Other 26 46 Operating flow 140 164 As regards the operating flows not generated by the Toll roads division, note the improved flow at Services, principally as a consequence of the one-off VAT refund in 2012 from the A2 corridor. INVESTMENT FLOW The principal outflow in this respect was investment in concession assets under construction at the Toll roads division in 2013, particularly in the US (the North Tarrant Express and the LBJ). Jun-13 Jun-12 LBJ -201 -168 North Tarrant Express -160 -128 SH-130 -4 -41 Chicago -1 0 Spanish Toll Roads 0 -3 Portuguese Toll Roads -2 -10 Other 0 0 Toll Roads Total -368 -351 Others -7 -12 Projects Total -375 -363 FINANCING FLOW The financing flows include the dividend payments and capital repayments made by the concession companies to their shareholders, as well as the capital increases received by these companies. In the case of the concession companies consolidated by the Group by the global integration method, these amounts correspond to 100% of the cash outflows and inflows of the concession companies, independent of the percentage stake held by the Group. No dividends or capital repayments are included for the companies consolidated by the equity method. The interest flows correspond to the interest paid by the concession companies, as well as other commissions and costs closely related to obtaining financing. The flow for these items corresponds to the interest expense relating to the period, as well as any other element which has a direct impact on net debt during the period. This amount does not match the financing result in the income statement, fundamentally due to the timing differences between accrual and payment of interest. Interest Cash Flow Jun-13 Jun-12 Spanish toll roads -31 -42 US toll roads -64 -62 Portuguese toll roads -14 -12 Other toll roads -7 -9 Toll Roads Total -116 -125 Other -16 -15 Total -132 -139 In addition, the financing flow includes the impact of exchange-rate movements on foreign currency-denominated debt, which at end-June 2013 amounted to -EUR44mn, fundamentally due to dollar appreciation against the euro, which had a significant impact on the net debt of the US toll roads. Finally, the heading “Other non-cash debt movements” includes elements that imply a variation in accounting debt, but where there is no actual cash outflow or inflow, such as interest accrued and not yet paid, etc.
  19. 19. Results January-June 2013 19 APPENDIX I: SIGNIFICANT EVENTS  Ferrovial successfully issued EUR500mn of bonds maturing on 30 January 2018. (18 January 2013) Ferrovial Emisiones, S.A., a Ferrovial subsidiary, successfully closed the pricing of a EUR500mn bond issue maturing on 30 January 2018 and guaranteed by Ferrovial and some of its subsidiaries. The bonds have a coupon of 3.375% payable annually. On 3 January the issue was subscribed and paid by the investors, and started trading on the regulated London Stock Exchange. The net proceeds of EUR497.75mn will be used to retire existing corporate debt.  Ferrovial Servicios reaches an agreement with 3i Group plc for the acquisition of 100% of Enterprise Plc. (21 February 2013) The investment made by Ferrovial Servicios amounts to an EV of GBP385mn. The deal does not include Enterprises’s joint-venture with Mouchel Limited (Mouchel) for highway maintenance services in the UK. Enterprise is one of the principal British services companies in the utilities (energy and water) and public-sector infrastructure sectors. In 2012, turnover reached GBP1.1bn (EUR1.267bn) and EBITDA GBP60mn (EUR69.1mn), excluding the JV with Mouchel. With this acquisition Ferrovial Servicios – with a presence in the UK through its subsidiary Amey – enters the field of services to energy and water companies, as well as strengthening its environmental services business. The acquisition was closed on 9 April 2013, after obtaining the approval of the competition authorities.  The rating agency Standard & Poor’s upgrades Ferrovial, S.A.’s long-term rating from “BBB -” to “BBB” with stable outlook. (9 May 2013)  Ferrovial successfully issues EUR500mn of bonds maturing on 7 June 2021. (28 May 2013) Ferrovial Emisiones, S.A., a Ferrovial subsidiary, successfully closed the pricing of a EUR500mn bond issue maturing on 7 June 2021, guaranteed by Ferrovial and some of its subsidiaries. The bonds carry a coupon of 3.375%, payable annually. The bonds were subscribed and paid up on 7 June, and listed for trading on the regulated London Stock Exchange. The net proceeds of EUR496.58mn will be applied to the retirement of existing corporate debt (reduced to c.EUR28mn outstanding from the syndicated loan).
  20. 20. Results January-June 2013 20 APPENDIX II: PRINCIPAL CONTRACT AWARDS CONSTRUCTION  Santiago Metro T4 L3, Empresa Pasajeros Metro, S.A., Chile.  Hetco 2 Programme Change, Heathrow Airport, UK.  Educational building, Juncal Alcobendas, Spain.  Mostoles University Hospital, Inversiones Sur 2012, S.A., Spain.  134 residential units, Miralbueno, Spain.  EDAR Tomaszow Mazowiecki, Department of Water Management, Tomaszow, Poland.  Iregua water supply, Aguas de las Cuencas de España, Spain.  Dual carriageway Purchena - Cesion DETEA, Autovía del Almanzora, Spain.  Drainage improvements in Sandin, Aqueducts & Drainage Authority, Puerto Rico.  Arroyo Niebla, Acuasur, Spain.  60 residential units Bon Pastor, Ayuntamiento de Barcelona, Spain.  51 residential units Vitra Legazpi, Vitra Madrid, Spain.  Improvements to wasteland irrigation Sector 3, SEIASA del Norte, Spain.  Gomasper concession, Canary Islands government, Spain.  Refurbishment Hotel Beach House, Evertmel, S.L., Spain.  65 residential units La Térmica, Inmobiliaria Acinipo, Spain.  HQ Pevasa Bermeo, Vasco-Montañesa Fishery, Spain.  Metro station in Granada, Metro de Granada, Spain.  EDAR Gorzow Wielkopolski, Department of Water and Drainage Management Poland.  EDAR maintenance, Ibiza Zona E-2, Balearic Islands government, Spain. BUDIMEX  Metropolitano de Pomerania Phase I, Poland.  Continuation of works on A4, Tarnow Rzeszow, Poland.  A4 Rzeszow West - Rzeszow Central, Poland.  University Hospital Clinic in Bialysto, Poland.  KGHM – industrial units, Poland.  Extension of take-off zone at Warsaw Airport, Poland.  Apartments in Sienna Phase II, Poland.  Pavilion with 4 cupolas, Wroclawiu Museum, Poland.  EDAR modernisation, Tomaszów Mazowiecki, Poland.  Waste treatment plant, Belzyce, Poland.  Teaching centre at Chemistry faculty, University of Poznan, Poland.  Garage for MPK Lublin (municipal transport company), Poland.  Landing zone at Okecie PPS Airport, Poland.  Construction of additional floors for buildings in Wroclaw, Poland.  Pensions Sabe-Swinoujscie, Poland.  Construction of furnace for KGHM POLSKA MIEDZ SA, Poland.  Remodelling of breakwater in Dziwnow, Poland. WEBBER  US 290, TxDOT, USA.  Denton FM 1171, TxDOT, USA.  I 10 Bexar County, TxDOT, USA.  I-45 TMS Improvements, TxDOT, USA.  US 59 Angelina, TxDOT, USA.  Lonestar Executive Airport Runway Ext, TxDOT, USA. SERVICES SPAIN Industrial, Treatment and Local Administrations  Contract for cleaning and conservation for public and green spaces for Madrid City Council. Lot 1, including the Central, Chamberí, Tetuán and Argüelles districts.  Waste treatment and evaluation plant, Vega Baja, Alicante  Highway cleaning and waste collection, City of Alicante  Renewal of contract for maintenance of parks and gardens in Almeria.  Renewal of contract for urban waste collection and highway cleaning in Premiá del Mar  New gardening contract for Banco de Santander’s financial city  Extension of contract for urban waste collection in Formentera Infrastructure  New maintenance contract for Telefónica’s data processing centre  Cleaning of primary health care centres for the Community of Madrid  Extension of services contract for various Madrid districts (Usera, Fuencarral-El Pardo, Hortaleza and Central)  Extension of cleaning contract for the Virgen del Rocío University Hospital  Extension of contract for cleaning Seville University UK  Design, construction and operation of a waste treatment complex in Milton Keynes.  Street maintenance and highway cleaning in Liverpool.  Maintenance and conservation of municipal buildings in three London boroughs (Chelsea, Kensington and Hammersmith & Fulham).  Waste collection in Northamptonshire.  Extension of BBA contracts: maintance of T4 and T5 at Heathrow, Heathrow Express and Stansted Airport.  New consultancy contract for integrated services for the county of Kent.  Installation and maintance of meters and water distribution networks for United Utilities. INTERNATIONAL  Incorporation of Steel Ingeniería’s portfolio, Chile.  Renewal of urban waste collection contract for Planalto Beirao, Portugal.  Different awards by Ferrovial Servicios Poland.  Furnace cleaning, Chuquimata mine.
  21. 21. Results January-June 2013 21 APPENDIX III: EXCHANGE-RATE MOVEMENTS Exchange-rate Last (Balance sheet) Change% 13/12 Exchange-rate Mean (P&L) Change% 13/12 GBP 0.8565 5.4% 0.8532 3.9% US Dollar 1.3005 -1.5% 1.3103 0.8% Canadian Dollar 1.3691 4.3% 1.3407 2.7% Polish Zloty 4.3316 6.0% 4.2153 0.0% Exchange rates are expressed in units of currency per euro, with negative variations signifying euro depreciation and positive variations euro appreciation. INVESTOR RELATIONS DEPARTMENT ADDRESS: PRÍNCIPE DE VERGARA 135 - 28002 MADRID TELEPHONE: +34 91 586 25 65 FAX: +34 91 586 26 89 E-MAIL: IR@FERROVIAL.ES WEB: HTTP://WWW.FERROVIAL.COM Important information This document contains statements regarding the Company’s future intentions, expectations and forecasts at the time of writing. These statements are based on projections and financial estimates with underlying assumptions, announcements relating to plans, objectives and expectations that refer to various aspects, including the growth of the various lines of business and the global business, market share, the Company’s results and other aspects relating to its activities and situation. These estimates, projections and forecasts are not in themselves guarantees of future performance as they are subject to risks, uncertainties and other important factors that could result in the development and final results differing from those contained in these estimates, projections and forecasts. This should be taken into account by all individuals or institutions that might have to take decisions or form or transmit opinions relating to stocks and shares issued by the Company, and in particular, by the analysts and investors who consult this document. All interested parties are invited to consult the documentation and information publicly available or filed by the Company with stock market supervisory authorities and, in particular, the information filed with the CNMV (the Spanish stock market regulator).