Ferrovial N.v. · BME:FER
Ferrovial — Investor Presentation (July 2017)
66 slides from Ferrovial's investor presentation, July 2017
Slide 1: Growing Infrastructure
ferrovial Growing Infrastructure ferrovial App 1
Slide 2: People & Environment
FY2016 figures People Environment TALENT MANAGEMENT, ENGAGEMENT & CULTURE Operating excellence & innovation are possible given Ferrovial employees’ Ferrovial assumes a firm commitment on emissions reduction and environmental talent, high engagement & corporate culture. Over 96.000 people work in the
Slide 3: Innovation and Say on pay
FY2016 figures Innovation Say on pay Ferrovial understands innovation as a differential element that allows it to lead PRESIDENT & CEO REMMUNERATION the Infrastructure & Services transformation, offering its clients and users solutions that contribute in an efficient, sustainable and safe way to the
Slide 4: Community
FY2016 figures Community In its commitment to the scope of Sustainable Development Goals (SDG), Ferrovial actively participates in the community through the development and execution of social programs to significantly improve people's lives. The company has a key role in the social and economic dev
Slide 5: Table of Contents
Table of Contents Ferrovial Overview Main assets Business divisions Latest update on results Appendix: 407ETR vs Managed Lanes Managed Lanes toll roads Investor Day 2017: – Highway Concession Business Value Creation – Different Concessions Models – Interest & Exchange rate risks Historic consolidate
Slide 6: Business model
Business model World leading private infrastructure provider present in toll roads, airports and cities Design Financing Building Operating Maintaining INFRASTRUCTURE PROJECTS Toll Roads Airports Equity provider Contractor Operator EX-INFRASTRUCTURE PROJECTS Services Construction 6
Slide 7: Cash Flow generation: Balanced Contribution
Cash Flow generation: Balanced Contribution FY16 figures INFRASTRUCTURE PROJECTS (40%) OPERATING €134mn CASH FLOW Dividends from Airports €290mn 27% Toll Roads Dividends from Toll roads 13% Airports PARENT COMPANY 64% Institutional & Retail Investors 36% Founder’s family members (Chairman controls 2
Slide 8: Solid Financial Situation
Solid Financial Situation FY16 figures € million EX–INFRASTRUCTURE PROJECTS Net debt evolution ex-infrastructure projects €mn 1,484 1,663 1,632 1,514 907 697 NET CASH 31 €697mn -1,172 -1,547 -1,987 -3,064 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 PARENT COMPANY INFRASTRUCTURE PROJECTS D
Slide 9: Reported P&L: Not the best indicator
Reported P&L: Not the best indicator Consolidated EBITDA does not include main infra assets; distorting valuation multiples FY16 figures FULLY CONSOLIDATED METHOD PROPORTIONAL METHOD €944mn EBITDA €1,721mn Services 31% infra 31% Construction 32% 17% 35% Toll Roads Airports 20% 63% infra 34% 31% ANAL
Slide 10: Business split vs. valuation
Business split vs. valuation Infra assets are the main value drivers (71%) vs their limited P&L contribution By BUSINESS By GEOGRAPHY REVENUES * FY16 results 56% 39% 5% 30% 24% 12% 12% 15% 7% Services Construction Toll Roads Infra assets: USA & Canada: 70% of valuation 57% of valuation 5% of revenue
Slide 11: Shareholder remuneration
Shareholder remuneration CF Criteria 917 +2.3% € mn 510 532 544 477 308 367 +77% 2010 2011 2012 2013 2014 2015 2016 SHAREHOLDER REMUNERATION PROPOSAL 2017 2016 Scrip dividend (€/share) First scrip dividend (equivalent to 2016 complementary dividend) 0.32 0.311 Second scrip dividend (equivalent to 20
Slide 12: Ferrovial main assets
> Ferrovial main assets ferrovial
Slide 13: Ferrovial's main Toll Roads
Ferrovial’s main Toll Roads High Complexity Concessions (HCC) Tariffs can change every day Freedom to set tariffs Tariffs can change every 5 minutes Greenfield projects Demand risk Urban congested corridors Fully Electronic Pricing Power Dinamic Tolling Long duration Free flow – Construction Complex
Slide 14: 407ETR Canada
407ETR Canada, Ferrovial stake 43%, Equity method LONG DURATION & PRICING FLEXIBILITY • 108kms in Greater Toronto • Tariff freedom • Tariff flexibility by segment, direction, time, day… • 81 years to maturity (to 2098) • Alternative routes are strongly congested • Fast & reliable travel times • Free
Slide 15: The only non-congested road to cross Toronto
407 ETR The only non-congested road to cross Toronto Typical traffic on a Wednesday at 5:20 p.m. 407ETR 407ETR 407ETR Source: Google 15
Slide 16: 407 ETR location and expansion
407 ETR Location Area of expansion 407 East extension High density population area Ring road of Toronto 108 km 407 16
Slide 17: Reasons for 407 ETR's success: Yesterday
407 ETR Reasons for 407 ETR’s success YESTERDAY → Perfect location → Excellent prospects for business growth GTA POPULATION 4.5 mn POPULATION EMPLOYMENT MEGAZONES Sources: - Planning for Prosperity – November 2015 - (Globalization, Competitiveness and the Growth Plan for the Greater Golden Horseshoe
Slide 18: Reasons for 407 ETR's success: Today
407 ETR Reasons for 407 ETR´s success TODAY → Perfect location → Excellent prospects for business growth GTA POPULATION 6.5mn +44% vs 1996 407 avg PK hour speed : 100 Kph 401 avg PK hour speed : 20 Kph POPULATION AREA URBANIZED EMPLOYMENT MEGAZONES BETWEEN 2006 & 2016 18
Slide 19: Reasons for 407 ETR's success: Tomorrow
407 ETR Reasons for 407 ETR´s success TOMORROW Future growth in population & employment to support traffic EMPLOYMENT GROWTH (2021 – 2041) POPULATION GROWTH (2021 – 2041) 407ETR Regions includes: Toronto, Durham, Peel, Halton & York Source: Government of Ontario Places to Grow Strong EBITDA growth …
Slide 20: Financial overview ($CAD million)
407 ETR Financial overview ($CAD million) 2016 figures REVENUES CAPITAL EXPENDITURE CAGR: 9.5% 1,135 97 90 88 72 77 70 74 70 72 55 456 38 81 years to maturity 2006 2016 OPEX DIVIDENDS CAGR: 3.8% 150 750 790 680 730 600 103 100% pay-back in first 10 years 460 300 145 120 135 190 2010 2012 2014 2015 2
Slide 21: Cash flow and valuation overview
407 ETR Cash flow and valuation overview CASH GENERATION (1999 - FY2016) 407 ETR EQUITY VALUATION 100% (€mn) € million € million Cash Generation 100% pay-back 17,580 Initial equity invest.(62%) -326 mn in first 10 years Dividends 1,761 mn 33x 10%Disposal 640 mn NET CASH IN 2,075 mn Valuation 33x 525
Slide 22: Managed Lanes Texas
Managed Lanes Texas, USA, Global Consolidation. NTE 57%, LBJ 51% LONG DURATION & PRICING FLEXIBILITY • 3 Managed Lanes in Dallas - Fortworth (2 open: NTE & LBJ) • Dynamic tolling: can change tolls every 5 mins • 44 years to maturity (to 2061) • Higher speed allowed (70mph vs 60 on free lanes) • Free
Slide 23: New assets landmark: Express Tollway within an Existing Highway
Managed Lanes New assets landmark “Express Tollway within an Existing Highway” Free Tolled Lanes Free Lanes Speed >50mph Lanes A solution to congestion on “existing urban corridors” by means of Active management of “newly added capacity” through tolling 23
Slide 24: Dallas and Fort Worth Regional Map
Managed Lanes Dallas and Fort Worth Regional Map Managed Lanes regional map LBJ NTE 1-2 NTE 35W 24
Slide 25: Managed Lanes volumes vs speed in free lanes
Managed Lanes Volumes in ML vs Speed in free lanes 100 3.000 83 2.250 Average Speed (mph) Traffic Volumes in ML (veh) 65 1.500 48 750 30 0 12a 3a 6a 9a 12p 3p 6p 9p Time of Day Hourly traffic Speed in free lanes 25
Slide 26: NTE & LBJ
Managed Lanes NTE & LBJ GROWTH SINCE OPENING (NTE) GROWTH SINCE OPENING (LBJ) 400 240 350 220 300 200 180 250 160 200 140 150 120 100 100 Index 100 4Q'14 1Q'15 2Q'15 3Q'15 4Q'15 1Q'16 2Q'16 3Q'16 4Q'16 1Q'17 2Q'17 4Q'15 1Q'16 2Q'16 3Q'16 4Q'16 1Q'17 2Q'17 Revenue Txns Rev/Txn Transactions Revenue Re
Slide 27: Toll rates – tariff threshold
Managed Lanes Toll rates – tariff threshold Toll Rate Toll Rate Cap 0.75 0.87 c/mi $/mi Demand threshold 3300 pce/h 2-lane sections Speed Speed Threshold 50 mi/h Demand 12:00 1:00 2:00 3:00 4:00 5:00 6:00 7:00 8:00 9:00 10:00 11:00 12:00 Hour starting Analysis by segment and direction Freedom under
Slide 28: Heathrow Airport
Heathrow Airport London, UK, Ferrovial stake 25%, Equity method THE BUSIEST AIRPORT IN THE WORLD • 472,067 Annual flights (1,293 per day) • 183 destinations in 82 countries • 25% UK exports (1.5mn metric tonnes) • 75,7mn pax in 2016 (all-time high) • +3.9% YTD (Jun’17) Traffic growth • Heathrow oper
Slide 29: Heathrow: Best ever passenger service levels
Heathrow: Best ever passenger service levels FY16 figures Quarterly passenger satisfaction Passenger satisfaction European ranking 4Q 2006 – 4Q 2016 4.50 4Q16 4.20 ASQ score (out of 5) 4.19 4.00 4.00 3.80 3.60 3.50 3.40 3.20 3.00 2Q'10 2Q'11 2Q'12 2Q'13 2Q'14 2Q'15 2Q'16 4Q'06 4Q'07 4Q'08 4Q'09 2Q'0
Slide 30: Ferrovial Business divisions
Ferrovial Business divisions 30
Slide 31: Toll roads
Toll roads One of the world leaders in open-competition highway concessions → Focus on North America (Canada & USA) TRAFFIC EVOLUTION (2016) → Unique projects based on high complexity, free tolling, dynamic pricing & long term Canada Strong dividends 407ETR • €290mn dividends from projects +4.9% E
Slide 32: Construction
Construction Proven competitive tool to success in int’l bidding for complex greenfield infra projects → Ability to execute all types of civil engineering, industrial, building and water projects Video on Viaducto de Erques construction → Exceptional and complex projects, with broad diversification
Slide 33: Services
Services Recurrent cash flow generator with long duration Order Book, providing long term visibility → Diversified portfolio of activities in public & private sector (maintenance & operation of infra for transport, environment, industry, natural resources and utilities, and provision of facility man
Slide 34: Airports: HAH and AGS
HAH (Equity method, FERROVIAL stake 25%) 100% GBP million HAH P&L 1H17 % LfL +8.3% dividend increase in 2016 Revenues 1,375 +4.1% (GBP325mn vs GBP300mn in 2015 ) EBITDA 836 +6.8% All-time high in passenger number for 2016 EBITDA % 60.8% (75.7mn of passenger; +1% vs. 2015) Net debt 13,797 -3.6% 3
Slide 35: Latest update on results
> Latest update on results ferrovial 35
Slide 36: 1H17 Results
1H17 € million Results HIGHLIGHTS P&L 1H17 • Positive performance of main infra assets (407ETR, HAH & AGS), with solid traffic 1H17 1H16 Var % growth & greater contribution from dividends (EUR259mn dividends from projects). REVENUES 6,059 4,697 29.0% • Consolidated results grew in 1H17 with Revenues
Slide 37: Thank you
Thank you E-mail: [email protected] – Tel: +34 91 586 27 30 37
Slide 38: Appendix
Appendix 407ETR vs Managed Lanes Details on Managed Lanes Toll Roads Investor Day 2017: – Interest & Exchange rate risks – Different Concessions Models – Highway Concession Business Value Creation Historic consolidated & business units figures 38
Slide 39: How does the 407ETR compare to the new Managed Lanes?
How does the 407ETR compare to the new Managed Lanes? 407ETR Managed Lanes (NTE1-2) Participation: • 43%. Equity consolidated • 56.7%. Global consolidation Partners: • SNC Lavalin (17%), CPPIB (40%) • Meridiam (33%), Dallas fire & police pension scheme (10%) Concession period: • 99 years • 52 years
Slide 40: Appendix
Appendix 407ETR vs Managed Lanes Details on Managed Lanes Toll Roads Investor Day 2017: – Interest & Exchange rate risks – Different Concessions Models – Highway Concession Business Value Creation Historic consolidated & business units figures 40
Slide 41: Managed Lanes Financial Overview
Managed Lanes Financial Overview Financial structure Figures in US Dollars Total Investment: 2.05 bn 2.62 bn 1.36 bn Private Equity: 21% 427 mn 25% 672 mn 32% 430 mn Cintra: 242 mn (57%) 343 mn (51%) 231 mn (54%) Meridiam: 141 mn (33%) 107 mn (16%) 75 mn (18%) DPFPS: 43 mn (10%) 44 mn (7%) APG: 178
Slide 42: North Tarrant Express
Managed Lanes North Tarrant Express Opened on October 2014, 9 months ahead of schedule KEY CHARACTERISTICS DESCRIPTION: Dallas-Fort Worth Metroplex, Major thoroughfares between Fort Worth and DFW Airport LENGTH: 13 mile section (IH 820 & SH 183 in Tarrant County) CONCESSION PERIOD: 52 years (since 2
Slide 43: Lyndon B Johnson
Managed Lanes Lyndon B Johnson Opened on September 10th 2015, 3 months ahead of schedule KEY CHARACTERISTICS DESCRIPTION: IH 635 (Dallas County), the most populous county in Texas LENGTH: 13 mile section of the IH 635 and IH 35E 108Km Electronic toll CONCESSION PERIOD: 52 years (since 2009) TARIFF P
Slide 44: North Tarrant Express 35W
Managed Lanes North Tarrant Express 35W Expected to open in mid-2018 KEY CHARACTERISTICS DESCRIPTION: 2 “managed lanes” in each direction of the IH-35W, segments 3A and 3B (3B segment to be built by TxDOT) LENGTH: 10.2 mile section (segments 3A 6.2 miles and 3B 4 miles) CONCESSION PERIOD: 48 years (
Slide 45: Appendix
Appendix 407ETR vs Managed Lanes Details on Managed Lanes Toll Roads Investor Day 2017: – Interest & Exchange rate risks – Different Concessions Models – Highway Concession Business Value Creation Historic consolidated & business units figures 45
Slide 46: What the economic theory says…
Ferrovial Investor Day 2017: Interest & Exchange rate risks What the economic theory says… NOMINAL REAL PRICES INTEREST INTEREST REAL GDP (INFLATION) RATES RATES Output gap Central bank increases the Demand and inelastic Monetary policy nominal interest rate to meet supply its target real interest r
Slide 47: Interest Rate Risk Infra-Asset Valuation
Ferrovial Investor Day 2017: Interest & Exchange rate risks Interest Rate Risk Infra-Asset Valuation There is a widespread belief among the investment comunity that “an increase in the interest rates reduces the value of the infra-asset”. In other words “INFRASTRUCTURE ARE BOND-LIKE ASSETS” VALUE (P
Slide 48: Categories of infra-assets as per variability of cash flows
Ferrovial Investor Day 2017: Interest & Exchange rate risks Categories of infra-assets as per variability of cash flows WITHOUT TRAFFIC RISK (NON-TOLL ROADS) 1. - Availability payment (no CPI adjusted) Towoomba (Australia) CF=K 2. - Availability payment (CPI adjusted) Norte Litoral ( Portugal) CF= (
Slide 49: Effect of interest rates on asset valuation by category (I)
Ferrovial Investor Day 2017: Interest & Exchange rate risks Effect of interest rates on asset valuation by category1 (I) AVAILABILITY DEMAND RISK & CPI Adj 1 Project i.e.: TOOWOOMBA 3 Project i.e: AUSOL 0% 3% Cintra´s Value Cintra´s Value Value Value Significant Stable value decrease value (Bond pro
Slide 50: Effect of interest rates on asset valuation by category (II)
Ferrovial Investor Day 2017: Interest & Exchange rate risks Effect of interest rates on asset valuation by category (II) Demand risk & Total free-rate tolling 94% Cintra´s Value 5 PROJECT I.E.: 407 ETR Sub-optimal price Optimal price TRAFFIC - Traffic ( VKT ) increases when the real GDP increases TA
Slide 51: Appendix
Appendix 407ETR vs Managed Lanes Details on Managed Lanes Toll Roads Investor Day 2017: – Interest & Exchange rate risks – Different Concessions Models – Highway Concession Business Value Creation Historic consolidated & business units figures 51
Slide 52: Different Concessions Models
Ferrovial Investor Day 2017: Different Concessions Models Different Concessions Models From value to standpoint … very different “animals” fall within the CATEGORY OF “HIGHWAY CONCESSION” AVAILABILITY PAYMENT PROJECTS DEMAND RISK PROJECTS TARIFFS LINKED TO LOW HIGH NOT CPI INDEXED CPI INDEXED CPI IN
Slide 53: What makes the difference?
Ferrovial Investor Day 2017: Different Concessions Models What makes the difference? LOW COMPLEXITY CONCESSION AVAILABILITY PAYMENT CPI INDEXED THE BID IRR: the higher the Bid IRR, the larger O&M + Capex + Tax Debt Service the room to reduce the rate of discount Low Bid IRR Equity distributions (1
Slide 54: Appendix
Appendix 407ETR vs Managed Lanes Details on Managed Lanes Toll Roads Investor Day 2017: – Interest & Exchange rate risks – Different Concessions Models – Highway Concession Business Value Creation Historic consolidated & business units figures 54
Slide 55: How does the highway concession business create value?
Ferrovial Investor Day 2017: Highway Concession Business Value Creation How does the highway concession business create value for shareholders? A HIGHWAY CONCESSION: a contractually defined set of rights and obligations with regards to vehicles moving in a certain route during a period of time Bas
Slide 56: How do sponsors create value?
Ferrovial Investor Day 2017: Highway Concession Business Value Creation How do sponsors create value? THE NORMAL WAY: meeting expected cash flows as we put risks behind, that is, DE-RISKING or reducing the market discount rate of the business as projects mature AN IMPORTANT “NICE TO HAVE”: cash flow
Slide 57: Value creation: derisking & rolling forward
Ferrovial Investor Day 2017: Highway Concession Business Value Creation How do sponsors create value? THE ROLLING FORWARD EFFECT: progressive increase of value as we get closer to back ended cash flows VALUE CREATION: DERISKING & ROLLING FORWARD €100M invested in one of our ML’s 1,702 1,662 VALUE* 1
Slide 58: Appendix
Appendix 407ETR vs Managed Lanes Details on Managed Lanes Toll Roads Investor Day 2017: – Interest & Exchange rate risks – Different Concessions Models – Highway Concession Business Value Creation Historic consolidated & business units figures 58
Slide 59: FY16 Results
FY16 € million Results Income Statement Revenues FY16 FY15 Var % LfL FY16 FY15 Var % LfL Construction 4,194 4,287 -2.2% -2.7% Revenues 10,759 9,701 10.9% 1.2% Airports 4 8 -49.9% -68.6% Toll Roads 486 513 -5.3% 24.8% EBITDA 944 1,027 -8.1% -4.0% Services 6,078 4,897 24.1% 2.8% Other -4 -6 n.a. n.a.
Slide 60: 2016 Highlights
2016 Highlights €995mn Operating Cash Flow (pre-tax) Solid cash generation • 40% from infra projects dividends Shareholder remuneration €544mn (€532mn in 2015) Traffic growth across the board Strong operating growth New awards in core markets (I-66) Total order book increase (+6.3%) €697
Slide 61: Historic consolidated figures: 2012-2016
Historic consolidated figures: 2012-2016 mn € mn € Operating CF ex-infra projects (before tax.) Net debt OCF ex-infra 939 1,097 1,076 889 995 ND -5,106 -5,352 -6,230 -4,542 -4,266 Op. CF (Construction 1,489 1,663 1,632 1,514 N. CASH EX- 697 & Services) 538 663 640 INFRA 591 560 Dividens from infra I
Slide 62: Construction figures: 2012-2016
Construction figures: 2012-2016 mn € Operating & investment CF (ex-projects) Revenues 304 4,244 4,326 3,942 4,287 272 4,064 OCF ex-infra 236 245 10% 17% 15% (before tax) 14% 17% 31% 29% 33% 27% 29% 100 59% 53% 56% 54% 2012 2013 2014 2015 2016 56% EBITDA ex-project 324 329 335 380 329 2012 2013 2014
Slide 63: Services figures: 2012-2016
Services figures: 2012-2016 mn € Operating & investment CF (ex-projects) Revenues 6,078 491 4,897 4,401 24% 359 OCF ex-infra 395 3,656 302 (before tax) 289 2,951 45% 63% 59% 62% 51% 49% 39% 36% 34% 29% 2012 2013 2014 2015 2016 2012 2013 2014 2015 2016 EBITDA ex-project 273 264 321 237 241 Spain UK B
Slide 64: Toll roads figures: 2012-2016
Toll roads figures: 2012-2016 Dividends received Managed Investment mn € 290 7% 255 267 242 13% USA 220 25 46 25 31 1,877 km Canada 22 44% 7% Spain 27 concessions UK & Ireland 224 242 244 217 8% 198 9 countries Rest od Europe Rest of World 21% 2012 2013 2014 2015 2016 407-ETR Others Years to maturit
Slide 65: Airports figures: 2012-2016
Airports figures: 2012-2016 Portfolio Heathrow Heathrow (25% stake) *AGS (50% stake) Heathrow shareholders 2 runways Aberdeen 183 destinations Glasgow 25% 20% 12.6% 11.2% 11.2% 10% 10% 82 Countries Southampton 80 Airlines Ferrovial Qatar Brittania GIC Alinda CIC USS Dividends received from airports
Slide 66: Disclaimer
Disclaimer This document may contain statements that constitute forward looking statements about the Company. These statements are based on financial projections and estimates and their underlying assumptions, statements regarding plans, objectives and expectations, which refer to estimates regardin