ACS, Actividades de Construcción y Servicios, S.A. (ACS) Earnings Call Transcript & Summary

Good morning, everyone, and thank you very much for joining us in this 2023 results presentation. Our Chairman will be joining us later. Until then, I'm going to proceed with the presentation. I'm here with Mr. Ángel García Altozano, who's Corporate Chief Officer, Mr. Emilio Grande, who is our CFO, and as usual after the presentation there will be time for a Q&A in which we will clarify any questions you may have. If you are following this online, you can send in your questions through the usual channel. I'd like to start by mentioning the 5 most relevant highlights of 2023. First of all, the group has had an outstanding year in operational results. Net operating income increased by 16.6% to EUR 667 million, which is on the high end of the range -- of the guidance we gave for 2023 of 10%. Our income grew by 10.9% adjusted by Forex, and our EBITDA rose 13.5% also adjusted by Forex up to EUR 1.9 billion. So EBITDA margin was 5.3%, which was higher than the previous year. Secondly, the group has had very solid cash flow generation with EUR 2.2 billion in gross operating cash flow which grew 10.9%. Our available cash flow for shareholder remuneration and financial investments was EUR 1.054 billion. Thirdly, the strong cash flow generation has enabled us to increase our net cash position by EUR 176 million to EUR 400 million on closing of the year. And all of that after having invested EUR 462 million to increase our HOCHTIEF stake and to pay our EUR 632 million to ACS shareholders as well as minorities. Fourthly, we've had very strong growth in contract awards, 20%, we adjusted by the exchange rate with over EUR 45.1 billion. 44% of new awards have taken place in strategic high-growth markets, including technology sector, energy transition, social infrastructures, including those in the areas of Health, Education and Biotechnology as well as sustainable mobility projects. We've increased the number of awards in all of our geographies with a total backlog of approximately EUR 78.5 billion at closing. So we are experiencing strong growth and we predict that this is a trend that will continue in the future. Fifthly, we continue to strengthen our risk management policies. For example, we are including the weight of lower risk contracts, including partnerships, collaborative contracts, open book contracts and so on which are currently 85% of our infrastructure backlog when 5 years ago it was under 60%. Looking at the main metrics of 2023, we can see that the group had an excellent performance in all of it's main metrics. First of all, turnover rose by 10.9% adjusted for the exchange rate, up to EUR 35.7 billion. Our backlog at the end of the year was over EUR 73.5 billion. That's 9.5% higher than at the end of last year in constant euros. EBITDA in the year was EUR 1.909 billion, 13.5% higher than the previous year, net profit increased EUR 780 million that's 16.7% or 18.5% in current euros. In the next slide, we will see the breakdown of the different components of this growth. Our gross operating cash flow was EUR 2.24 billion. That's EUR 221 million more than the previous year. By December 30, 2023, the group had EUR 400 million net cash, which is EUR 176 million better than the previous year thanks to volume growth as well as to our new capital allocation strategy, but we'll talk about this in more detail later. In the next slide, you can see the group's net profit for the year with the breakdown by activity. Our net profit was EUR 780 million. That's up 16.7% in the year, thanks to, first of all, Construction, which contributed EUR 434 million because of the excellent performance of the businesses and our bigger stake in HOCHTIEF with 28.9% increase year-on-year. On the other hand, our Concession business brought in EUR 206 million, of which EUR 179 million were the Abertis contribution, EUR 36 million more than the previous year due mostly to the recovery of traffic volumes, which grew 3.4% and increase in tariffs above 7%. Net profit from Services was EUR 28 million that's pretty much in line with last year's results. And therefore, the widespread improved performance of our businesses meant that our net ordinary profit from activities grew to EUR 667 million. That's 16.6% more than the previous year. And our total net profit was EUR 780 million if we include the impact of one-offs, including the net capital gains of EUR 180 million from the sale to Abertis of our 57% stake in Highway SH-288 and so the group's total net profit grew 16.7%. And finally, our [ BPI ]was EUR 3 per share which is up 19.7%. That's our earnings per share. On December 31, the group had a very solid cash position of EUR 400 million. That's EUR 176 million more than the last year's closing. Our gross operational cash flow was over EUR 2.2 billion, of which EUR 1.054 million (sic) [billion] with free available cash flow for shareholder remuneration strategic investment. Investment to increase our HOCHTIEF stake was EUR 452 million. And shareholder remuneration for ACS shareholders and minorities by HOCHTIEF and ACS was EUR 632 million. Moving on now to looking at the results by activities. I was going to start with Construction in the next slide. Construction revenues were approximately EUR 33.4 billion, that's up 6.1% or 10.4% in current euros, more while our EBIT grew 13.4% or 19.6% in current euros up to EUR 900 million. Our net margin showed good stability due to improved margins in HOCHTIEF America and the contribution of high value-added projects. Our backlog grew 6.9% or 9.9% in current euros and is at approximately EUR 70.6 billion at the end of the year. Awards increased considerably thank you to -- thanks to high growth markets like digital and technology, energy transition, BHE or Biopharma, Health and Education and sustainable mobility. Slide #8, you can see the revenue and backlog data by region. North America revenue, EUR 21.6 billion, up 5.1% or 8.8% if you adjust for the exchange rate. The backlog grew to approximately EUR 38.5 billion. That's 7% more because of excellent increase in awards to about EUR 25 billion. The strong growth of revenue in Asia Pacific with EUR 8.1 billion. That's 20% more in local currency. The backlog grew 4.3% in local currency to EUR 19.5 billion driven by EUR 11.7 billion in new awards. Europe's revenues increased 3.1% up to EUR 3.3 billion and the backlog 22% driven by over EUR 5.9 billion in new awards. In this slide, you can see the breakdown of our Construction backlog. Awards were approximately EUR 43.2 billion in the year. That's 15.8% or 19% in local currency. And with stronger growth in strategic segments like Digital, Technology, Energy Transition, Health, Biopharma or Education and Sustainable Mobility, which now represent almost half of our annual awards. In Slide #10, you can see a list of contracts awarded in our main markets. First of all, Energy Transition projects. Let's say, global mega trend, which is still driving strong investment plans by governments, institutions and large corporates, which will include first of all the extension of a battery storage energy system in Australia by Neoen, which is one of the main global promoters of renewable energy. And high-voltage transport HumeLink West project in West Australia as well as factories for manufacturing batteries for EV vehicles in the U.S., including Panasonic battery factory in Kansas and another one for Honda and LG Energy in Ohio. Also the engineering and construction of a lithium hydroxide plant in Australia and a nickel extraction contract in Indonesia. And secondly, projects in the digital and technology sectors, which continue to grow in all of our main markets, growth of the data center market is driven by the high demand for computational power and AI with awards of approximately EUR 3.5 billion. Some examples include 10 projects of data centers in several states in the U.S. as well as Multi-phasic data center in the Philippines. And thirdly, Infrastructure in the area of sustainable mobility and smart cities, which is also a long-term structural growth market. In this area, the group most received several awards for contracts including a network of fast charging for electric vehicles in Germany, the light train in the Green Line in Calgary in Canada and the development of the first set of tunnels for the suburban rail loop east project for the Victorian government in Australia. In Health, Biopharma and Education, we have projects such as the extension of the Westchester Medical Center in New York. The Research and Development lab of Labor Kassel in Germany and the Orlando Hospital in Florida as well as the Bundaberg Hospital in Australia. Group is also well positioned in defense because of our reputation and expertise over decades. During this period, we have been awarded several projects in our main regions, including 2 buildings in the Omaha Air Force space in Nebraska for the U.S. State Department -- Defense Department and a contract to provide strategic advice, planning, supply management, operations and maintenance for the fuel network of the Australian Defense Force. I should also mention other civil engineering and construction projects, which still represent an important part of our business, including the modernization of 2 existing buildings of UN Headquarters, New York, the extension of Highway US 69 in Texas and the new stadium for the Tennessee Titans, the NFL in Nashville. As for Concessions, our EBITDA grew 35% to EUR 304 million, thanks to greater contribution from Abertis and the complete consolidation of SH-288 and Iridium. Net ordinary profit grew 5.7% to EUR 206 million. And that's we are including net capital gains of EUR 180 million for the sale of a 50% stake in 288 to Abertis. We included that net profit in the year would have been almost double up to EUR 386 million. In the next slide, #12, you can see more detail on the contribution to our EBITDA and the operating profit of the group of each company. Abertis increased it's contribution to the group's EBITDA, up to EUR 199 million. It's a very excellent performance was driven by the 7% tariff hikes, most of them linked to inflation and positive growth in traffic volumes with average daily traffic growth of 3.4%. For 2024, planned tariff increases according to the framework agreements applicable will be over 4.5%. So net profit Abertis contribution was EUR 179 million, that's 25% more. And Abertis paid in May, a total of EUR 602 million in dividends, of which EUR 297 million were paid to the ACS Group. In Iridium, the business remained stable at constant parameter. However, the consolidation of 288 increased the EBITDA by EUR 60 million to EUR 106 million. Although it had an insignificant level on net profit -- insignificant impact on net profit. The 288 still continues to perform well with -- which went up 14.9% in 2023, and we expect to increase by 15.2% in 2024 based on growth of Texas gross state product. Continue with Abertis, last July, we signed a new shareholders' agreement with Mundys for Abertis global leadership and transport infrastructure concessions. Abertis has an ambitious investment plan to grow its asset portfolio and promote sustainable long-term growth whilst maintaining an optimal capital structure and preserving its credit rating. During 2023, we have witnessed new examples of this strategy. First of all, the acquisition of 56.7% of 288, transaction price was $1.53 billion, equivalent to $2.7 billion in equity value for 100%. The second transaction was the award of a concession to operate 4 of the main roads in Puerto Rico for a period of 40 years. The price for the transaction was $2.85 billion. And as agreed beforehand in February 2024, Abertis shareholders contributed EUR 1.3 billion to partially finance these transactions and their -- preserve optimal capital structure and strengthen Abertis credit rating. In the next slide, #14, we can see how apart from Abertis' assets, which the group has, it's also got a backlog of 91 assets worldwide with a book value of over EUR 2 billion. We've got a whole lot of investment opportunities in different segments and regions, which would entail investing in greenfield infrastructure on a large scale. Iridium has been shortlisted for 10 different projects above all in transport, which would be a total investment of over EUR 16 billion in North America, Europe and Latin America. Right now, we're getting short listing processes done for another 38 projects and we're also investing in growth sectors like Digital, Technology and Energy Transition. And in 2023, we invested some EUR 150 million in that, along with EUR 43 million in traditional PPPs. We've identified a significant pipeline, investing in data centers and the German transport industry has awarded a HOCHTIEF joint venture contractor fund plan, build and operate a rapid charging grid for electric vehicles with a total investment of EUR 250 million, including CapEx of over EUR 50 million in Energy Transition. At the end of 2023, the Solar Park Glenrowan in Australia came online. Pacific has developed and invested category into the solar power station. And over the year, Pacific has also acquired Hopeland Solar Park for 300 megawatts in Queensland, which is the second solar project we have in such a large scale, which we've achieved recently. In [indiscernible], the earnings in 2023 showed sound operating performance worldwide and the growth of EBITDA was double digit, reaching EUR 107 million. Our backlog is EUR 2.9 billion, equivalent to 18 months of revenues. And amongst recent awards we've got are for military bases and Spanish hospitals, from the Ministry of Defense, the Adif contract for helping disabled travelers in the Spanish train stations. We can now move on to the strategic background to our results here. Basically, in the context of our year end results, I can take this opportunity to talk about how we are rolling out our strategy, which is made be up of 4 main pillars promoting the integration of the group's companies' operations and simplifying the group structure, leveraging our global position to capture growth opportunities of investment in infrastructure related to digitalization, decarbonization and reassuring and sustainable mobility, civil engineering and building, reinforcing our risk management and strengthening our balance sheet applying a disciplined capital designation strategy to ensure growth and an attractive level of returns for our shareholders. In the next slide, we see the group as it is right now, an integrated platform, which is promoting growth in strategic sectors, working through companies in 3 areas. First of all, what we call ACS integrated solutions and expert in integrated engineering solutions and high added value project management in building digitalization, technology, power industry and natural resources. Secondly, we've got ACS engineering construction working on civil engineering and building in general. Thirdly, ACS infrastructures, working in transport, education, health, energy, digitalization, sustainable mobility in greenfield and brownfield projects. And now moving -- well, you've seen the organization. Now we've had things divided over the 3 segments. But now we can move on to Slide 19 and see the 7 strategic initiatives we have focused on improving our risk profile and achieving high-growth in strategic markets. I talked about how we're improving the risk profile, focusing our growth on projects whose contractual structures mean that we are sharing risks, reinforcing our engineering capacities organically and through selective purchases in new markets, integrating our global supply chain through our subsidiary, well, Turner subsidiary SourceBlue and managing the supply chain. SourceBlue has a rapidly growing purchase volume of EUR 1 billion, which has grown very fast over the last 2 years, giving us a key competitive advantage in new market segments, developing global relations with our major multinational clients. A good example is how we're working with all the hyperscalable enterprise in North America, Europe and Asia Pacific. We're promoting greater operating integration of the companies in the group. So we can share know-how and achieve greater efficiencies. So we've got a new global platform for innovating the know-how we have in strategic segments that are key to growth. So we're taking the opportunity and not just investing in development of the assets we have, but working hard to invest in future businesses. Continuing on Slide 20, you can see here the key underpinnings of the group's strategy working on digitalization, decarbonization and relocalization. And as I said, this is basically the areas we're covering. In the next slide, you can see another key element of our strategy. The efficient designation of capital in order to support diversification, streamlining and growth whilst maintaining attractive remuneration for our shareholders. Investment strategy is grouped into 4 blocks. First of all, in Abertis where we're totally committed to working with our partner, Mundys, to foster growth and value creation through the acquisition of new assets. Secondly, working through inorganic growth. First of all, we're still putting capital into the consolidation and increasing of our technical and engineering know-how. Examples would be the Canadian deal with Novopro and the acquisition of the Skybridge Telecommunication Services. Also, in infrastructure we are deploying capital to increase the opportunities we have in traditional markets and growth markets and also in transport infrastructure as we've been doing for some years. Fourthly, we've got simplification or streamlining over recent years. We have streamlined the group after the purchase and exclusion of CIMIC and we're still analyzing opportunities there. And now we come to our conclusions. I'd like to give you some key take-home messages today based on our results in the last year. ACS has had sound operating profit with EBITDA and revenues growing double digits in like-for-like terms and backlog guarantees, we can continue that growth. Our earnings per share has grown 20% to reach EUR 3, which means we are offering a very attractive return to our shareholders. Thirdly, with 16.6% growth in net operating profit from our activities, we've gone way beyond the target established, which was to grow between 5% and 10%. For 2024 now, we're establishing the same target. And finally, I can say that we are making further progress in rolling out our strategy to establish the foundations for our growth in the future years with stable cash flow, a sound balance sheet and creating long-term value. Thank you for attending this call. And I hope that we can now answer any questions you might have.

Let's start first with the ones that have come in from online. There are several small minority shareholders who are asking, given the current reaction of the market, whether we're planning any exceptional one-off initiative or somebody is asking whether we're going to change or modify our treasury stock or share buyback policies and also with regards to the group's payout policy, whether we're planning any changes.

Excellent news. Well, thank you, Luis. We still believe that our basic value per share should be about EUR 50. We still believe in our strategy firmly and the reason why we sometimes do share buybacks is twofold. First, of course, because there's -- we use part of our dividend income for that and also when there's opportunities. Given the fundamental valuation of our share and the current trading price, it will probably be an opportunity, which we will analyze over the next few days.

And now getting to some of the questions from analysts who were unable to attend in person. I'll ask a couple, and then we'll open the floor for those of you who are here. Nicolas Mora has sent us a question about HOCHTIEF. Our stake in HOCHTIEF has increased in 2023. Are we comfortable with the current stake, 76% or 78.5% if we adjust by the exchange rate, what's the plan for HOCHTIEF?

Well, in that sense capital allocation policy, apart from strategic investments and so on, there's always a component which has to do with when opportunities develop and what sort of returns we can get. Currently, we're going to return from our investment in HOCHTIEF of over 14%. So that metric still works. But obviously, it's subject to the value or the trading price of the shares in the market.

There's quite few, but I'm just going to ask one more question so that we give people in the room a chance to ask questions directly. But there's another which is just asking us if we can give a bit more details. We've just announced that our target for ordinary net profit is going to be between 10% and 15%. Do we have any targets for turnover and EBITDA for 2024 and beyond?

Well, clearly, as you have seen in the trends for the company and our different priority sectors, we've had significant double-digit growth in all of our segments and businesses. And so we expect that to continue. However, in terms of our strategy and our growth, there is an important component, which is stabilizing our cash flow. And so we will continue to stabilize that, reducing the company's risks. That's a significant objective. And then there's recurring profit from our various businesses. But the most important part about the strategy is not so much the numbers, which are a consequence of strategy, the value of the platform, which is the ACS Group. And now we're trying to replicate the strategy followed in the '80s, 90s, the beginning of the 2000s when there were very strong growth trends for all construction groups in the world because of all that investment in Concessions. And so global groups, including ACS and our competitors grew very strongly from that moment from all that private investment, which came to a standstill in 2008 with the financial crisis and remained more or less constant for about 10 years. Now it's picking up again, not just in every traditional market and we have referred to the projects in which we have been shortlisted and in which we will be shortlisted, but also in all the new markets that we're opening because as we move between different construction segments, we're able to invest in those sectors and markets and so our growth platform at ACS and long-term opportunities are almost endless. I mean the guidance we've given now is tiny compared to the future potential we see and which we are already beginning to materialize and will continue to realize over the next months and years.

I'm Luis Prieto from Kepler. And I have 2 questions. First is there is a significant quantity of assets available for sale in your books. And so I wonder if you could give us more detail about the divestment process for these assets? And also Clece, how that process is going? And my next question is you spoke then about your M&A strategy and how to grow your business inorganically and you've spoken about different opportunities, but I wonder how you could grow the Turner business in other geographies through M&A to replicate that low-risk, high-growth model. Perhaps that's a topic for the Investor Day, but if you could tell us something now, I'd be grateful.

Well, first of all, as for our asset available for sale portfolio and non-core assets, we have particularly industrial assets, and that process is ongoing, and we hope to realize it throughout this year and the next and there's quite a lot of value to be captured there. And then on the other hand, we have Clece, which is not booked as an asset available for sale, but we have announced that we have an ongoing sales process, but it's confidential for now, and we're still working on it. And then we have the potential amortization of that 44% we still hold of the [ SH-288 ] but the problem or the advantage of the 288 is that is growing a lot. And so every month that goes by, the value goes up too because traffic and revenues grow month after month and tariffs are now going to go up 15%. So really we want to try and capture as much as possible of that growth so that the asset will be fully mature when we sell it. And that asset would be worth probably, I don't know, I can't really give you a number, but those assets together could add up to almost EUR 3 billion of non-core businesses, which we could monetize in the coming years. Another very important point I mentioned before, Luis, I'm sorry. And it's something that hasn't really been picked up on previous presentations, but excluding Abertis, we have a backlog of over 90 projects valued as equity in our books, not market value, EUR 2 billion. In addition, we have Abertis. At Abertis one of the things we told you in the HOCHTIEF results earnings presentation was that we were beginning to renegotiate some of our concessions without additional equity to extend in years and in revenue. And we have the confirmed the first one last week. So we have significant potential for organic growth in Abertis as well. Together with the acquisitions we are going to make with everything else, it means that Abertis will also grow very significantly driven by the excellent relationship between shareholders as well. So in terms of potential, we really expect very significant growth. We don't usually consolidate the EBITDA because we don't like doing that. But if we did consolidate the EBITDA of all those concessions, our EBITDA from infra and other assets would be about 50% of that of the group, and it's a variable we don't often talk about. And the question about Turner. Well, Turner is a group, which is bringing in almost EUR 18 billion in revenues right now in the U.S. and is a huge sector in Europe, which we're not able to access because we don't have the right platform. And so priority for us is definitely to open Turner in Europe this year. We can do it organically or inorganically. Organically, we have 3 -- inorganically, we have 3 potential opportunities we're analyzing and looking at and organically, of course. But if you look at the market in Europe and the success in the U.S. and you extrapolate with a 25% success rate for Turner in Europe, that would be very significant growth for our core sector. And opportunities of that we generate, well all kinds from the mall, potential smaller companies we could acquire. Do you remember Sedgman 2 years ago was engineering firm mostly natural resources focused on coal and that was because of ESG. It was a company that there weren't any major coal projects. It didn't have a lot of backlog. And looking at the strategy, we realized that given their engineering expertise, if we could provide our expertise of markets for other natural resources like lithium, vanadium, nickel, cadmium, rare earths and so on, copper and iron ore, we could really expand the potential of that firm enormously. And the investments we've made, like Novopro or Onyx where [indiscernible] will be announcing very soon, which is just about to be signed, have completely restructured [indiscernible], and now it's gone from having very little revenue and negative profit to EUR 50 million in profit this year and revenues growing hugely, and we doubled the EBITDA versus the previous year. And total investments we made is actually tiny. So one strategy is to replicate that same kind of approach with very small companies, which might be strategic in order to reinforce Turner's electromechanical capacity in Europe. But there's also some medium-sized opportunities between EUR 400 million and EUR 1 billion that we've identified. And then there are bigger opportunities.

I'm from Santander. I have 2 questions. The first about what you were just saying about extending the Abertis concessions. I think I've read in the press that you trust that you will be able to extend the duration of the concessions in France. I wonder if you can give us a bit more color on the rationale for that because the French government doesn't seem to be very willing to extend concessions. And the second question, which may be, again, this would be more for the Capital Markets Day, but it'd be really useful for us to have some idea of the kind of investment level, not the specific acquisitions, of course, but what kind of level of investment or strategic investments that we'd be expecting for the next years. This year, it was about just in HOCHTIEF EUR 384 million. Is that the kind of number you expect to replicate in the next year or not? Could you tell us a bit about it?

Sure. When we talk about concession extensions for Abertis, we're not referring to France. The French government has already said it won't be extending any concessions. What we think will happen in France is that there will be new tenders for those concessions. And we think that we are in a good competitive position to bid in those tenders and be awarded some of those concessions. So the concessions that are being extended are not the ones in France, mostly ones outside Europe because Europe does not allow extension of concessions. But beyond -- outside Europe, it is allowed. What's happening globally is that the governments in each country need to invest in construction and they have to invest to get -- to drive their economic growth because they need it. There's a huge gap in the maintenance of traditional infrastructure without even talking about new sectors when they're actually spending. And the best way to do that as ever has been to extend concessions, increase tariffs and allow the concession owners to invest. But that is not allowed in the European Union. And so in those other countries, we are seeing a lot of concession extensions and rising tariffs and that lengthens the life of the concession and the EBITDA, ex-France and we're working on it as well as investment opportunities. We've already identified several portfolios and several investment opportunities, which we're looking at. Of course, well known is the Australian competitive case we're participating in, which is the first one in the short term, but there will be others. Yes, our investment levels Capital Markets Day, definitely.

Juan, I am Victor from Societe Generale. I have a question about the projects that have already been made public and have been in the media in the U.S. and highways. Could you give us a bit more information? First was the one that was awarded in Denver in Colorado. I think Abertis was bidding with [indiscernible], I think. And I wonder if you could tell us what kind of multiple or what kind of transaction is that as far as the bid that you've presented, which you haven't been awarded the contract. And actually, I'll ask you my second question about the one with Meridian for the 400 in May, I suppose this might be confidential, but what kind of project is that SR as far as the size and then this sling thing which you've just mentioned is going to be short term. So, what's the timing for that announcement? The Australia one which we are bidding at East Link.

Well, Colorado, it's true that we've participated in that tender, but that's a very long-term concession. It doesn't generate any EBITDA or cash flows until a long time from now. It's like 80 years, I think so. Ultimately, if you take into account the highway with Abertis' business plan, we don't have any problems with receiving dividends after 2040 because by then, we'll have the 288 and Puerto Rico and a lot of the greenfields that we've contributed. But what we're interested in doing now is in reinforcing everything between 2031 and 2040, and we couldn't get that from Colorado. And so in terms of metrics, it was dilutive, and that's why we didn't really bid very competitively in that tender. SR-400 that's one of several managed lanes projects that are being put up for tender in Australia and with our experience -- sorry, in the U.S. and with our experience in toll roads and managed lanes in the U.S., we're very interested in that kind of project. I'll remind you that 288 the equity invested 100% at that time was approximately $340 million. And right now, we've sold at 100% for $2.7 billion. And we bought the remaining percentage in 2000, above our 21%. So the multiplier for the $340 million to the $2.7 billion and the $2.7 billion with the increase in traffic volumes are already obsolete because growth in this type of projects is huge, and we have a very good position and there are many projects that are to come, greenfield projects in the U.S. of this type. No, this one is much even bigger because Georgia, this is the first project, but there's 3 other projects that are going to be tendered in Georgia. And this first one is significantly bigger than the 288.

And what is your stake in that consortium?

Equity, it's about 33%, I think, and construction 50%.

And East Link?

The East Link, the process is ongoing. It's confidential. There's not much I could say in that case.

Quite a few questions have come in from analysts. A lot of them are asking whether it's one from Graham Hunt who's asking not just about the past, but also by the future, cash flow [indiscernible]. It seems that in this last year and especially in this last quarter, it was weak. But they're mostly asking about our outlook for the future, particularly in terms of working capital and with Dragados' business performance. So they're asking about the past, but also about the future of Dragados, if we can give some information about that.

Well, I'll actually say something about cash now because I see there's quite a lot of interest in the market as we've seen with what's happened with the share price today. And I'm going to talk about it from different perspectives. First of all, of course, the most obvious what is the ACS Group as a whole. And the ACS Group as a whole, if you look at cash flows, we have a gross cash flow of EUR 2 billion -- EUR 2.25 billion. That is a number which clearly, if you turn it into net cash flow at the group level, is EUR 1.054 billion. And so we've gotten over EUR 1 billion operating cash flow. That's from operations. And that number is excellent. And when you look at the ACS Group without HOCHTIEF, which is where all the speculation in the market is focusing, there's an accounting figure in our balance sheet, which does not represent the effective cash flow, and I'll explain why in a minute. That cash flow, first of all, is not normalized because there was double taxation this year with respect to last year. If we normalize by taxation, there would be a difference of EUR 300 million between the EUR 100 million last year and the EUR 200 million paid this year or over EUR 100 million in taxes that should be subtracted from that equation. There's approximately EUR 50 million increased interest, which is a one-off because these are things that are going to be run off very quickly. And then we have EUR 190 million in working capital for Dragados. And all of that is the unwinding, we're doing of our working capital because we're derisking the companies. And as we need to do that, we will continue to do that because we want a derisked company. So we've always said. And so clearly, that number, if you look at the normalized accounting number, it's very positive. But in any case, it's irrelevant because if we're talking about cash flow, you have to look at the real cash flow without taxes, without interest. And what is that ex-HOCHTIEF for the ACS Group. How much dividend have we received? EUR 300 million from Abertis. We received EUR 220 million, let's see if I have a number to hand from HOCHTIEF, EUR 60 million from Dragados, EUR 25 million from services, Iridium. So EUR 600 million, that's after taxes and normalized after interest rates, so EUR 600 million. And this EUR 600 million, what do we do? We use them to pay out dividends. And since part of that is paid out with shares from the previous year, we're not covering that 100%. And so with what do we pay HOCHTIEF's dividend with that because they give us a 14% return. But since we have assets that we can -- non-core assets we can monetize actually begin about cash flow, let's talk about cash flow and not about accounting. And if we talk about accounting, let's talk accounting. So if you understand that, it's purely speculation in the market today. Of course, we respect the market sentiment, but we're very comfortable with our long-term strategy. We're still convinced of our fundamental value of EUR 50 per share, and we believe it's going to keep growing. And to do that, we need to regulate and stabilize the risk of the companies. And to do that, we -- in Dragados, we've had to do some risk profiles and lower the project level so that we won't bid for certain projects, and that means an unwinding of advanced payments. But we have done that deliberately, and it's the right decision. And so we are very comfortable and happy with the current position of the group's future prospects.

And as for your actual question, there's also one from Joaquín Ferrer from [indiscernible], who's asking if we have a goal of reducing the net debt position of EUR 1 billion we have at the corporate level. So he's doing the same calculations you are doing of looking at it only from that individual perspective, if we're comfortable with this debt level at the corporate level.

Well, we are comfortable, of course, because if you look at the books, which is EUR 400 million net positive cash or the adjusted by banks and the rating agencies, our ratios debt-to-EBITDA are excellent on operating cash or debt. So we're very, very comfortable in that sense. Although right now, there are lots of opportunities in the market. And so we have, on the one hand, opportunities afforded by our own group through its bidding process, plus all those other M&A opportunities I've just mentioned in Europe and elsewhere and in digital segments like data centers and natural resources and hydrogen, a lot more opportunities, good opportunities, hydrogen 100% of the opportunity is maybe 4% really happen. But even if you only pick the really good opportunities, we have an extremely bright future. And now what we have to do is to see how to allocate our capital effectively given the monetization opportunities we have and the debt levels, we still have a lot of margin ahead. But given conditions in the market, I don't think now is the time to focus on debt reduction. I think now is the time to take advantage of opportunities and grow because we will be able to grow very significantly.

And there's a specific question from Filipe Leite from CaixaBank is asking if there's been any progress with tees and are buying 50%, the additional 50% we don't own.

Well, we mentioned that in the HOCHTIEF presentation, and we are talking with Elliott in order to gradually acquire the rest of tees because it does add value in terms of metrics, both cash flow and balance sheet and on the debt metrics, which rating agencies look at. So it's a good opportunity, plus there's a lot of growth in natural resources with the whole energy transition trend.

And there's another couple of questions about our stake in HOCHTIEF apart from the ones we already mentioned. Given that we are at over 75%, do we intend to ask for domination agreement, since we have the right to do so, since we've crossed that threshold? And the other question is whether -- no, it's just that one. All right.

So no, in principal, we're -- the requesting the domination agreement is not on the table right now. And talking about the domination agreement. I mean question that's been coming up for the last 7 years. A domination agreement only makes it possible to have rights to manage the company without taking into account the minority holdings with fixed returns. We operate the company as if it was 100% owned anyway. So there's no point in giving fixed deal to our minority shareholders. It wouldn't make sense. But it's something that comes up every year and it might make sense in other companies, but in ours, it just doesn't make sense.

There are some specific questions about contracts. Above all, we're being asked after the successful negotiations in the Harbor Bridge where there was a partner of us who's already talked about it about the [indiscernible]. They're asking if there's any request or any process, which might be a similar kind in the short term? What do you mean in terms of claims, claims?

Claims, right. Right now, we feel quite calm about the position we've already got with respect to possible claimants, and it's true that we've grown so much over recent years that it's now possible for us to be cautious in the exposure of our balance sheet assets. So we have to say that we feel quite calm about this. And obviously, there might be some litigation, but all it would mean would be that it wouldn't be a hit to the balance sheet, it would just affect our cash flow. And so in the group, we've got a lot of litigations, which have been going on for some time, which have an impact on the cash flow. So we put them in a discounted level in our P&L. And there are other similar things in the United States that might happen, yes, but they're all positive news, really. Possibly, the benefit we get from these potential receivables is above what we've booked the assets to our balance sheet. And from Barclays, we have asked for further clarification. Our target is an ambitious one for net profit between 5% and 10% growth. And so the question is, does that include for this year, the EUR 780 million of the positive and negative extraordinary one-offs? Or is the guidance is ordinary profit there. And that doesn't mean to say we won't get growth through global operating profit, and we hope that, that will be the case. And about the SH-288 after what you said, we're intending to sell it.

It is available for sale? Is Abertis is the only buyer or might there be other potential buyers? What's our medium-term strategy there?

Well, right now, there are several buyers who might be interested apart from Abertis. And it is available for sale because it is not core business. We've already got 50% of that 56%, and our idea is to recycle part of our assets to go on investing and maintain a percentage in them when we established a 50%, 56% in -- with the Abertis indirect holding as well as sufficient for the potential revaluation of the SH-288. Yes, we do expect to sell it at some stage, the question is when and how can we maximize its value.

And then regarding Abertis separate question, one has to do with this its capital structure is our aim to issue bonds, maybe hybrid bonds, to get additional capital into Abertis. What's our strategy for that?

Right now, without capital engagement, we feel quite comfortable with Abertis. And then long-term dividends, we have to look at the situation as it comes, but we are looking for opportunities all the time for growth. And I've already mentioned some of them. In nonorganic movements with possibility of concessions, which don't require equity. We've got various potential deals, which would require capital engagement, but they're included in our business plan for the next few years. So we look at the margin, which we include in the growth which is there to include Abertis capital deals, which could happen, but there are a lot of opportunities on the horizon, which would add to the metrics we already have in Abertis. That's important.

Finally, there's another question, which is related to the expected dividend for this year 2024 to be touched '23 earnings. Do we have any idea what it's going to be?

Well, we will maintain our payout policy and dividends.

Yes, one, a final question from me. To try to understand exactly the way you get the implicit value of HOCHTIEF for your books. You've talked about that 14% figure, is that the internal rate of return you have?

Yes. On current prices, yes, present net value.

Okay. If there are no further questions, many thanks to everyone. And if you wish or if you've got any more questions, you can ask us directly. Thank you. And you're all invited to come and share a drink with us right now. Thank you. [Statements in English on this transcript were spoken by an interpreter present on the live call.]