HOCHTIEF Aktiengesellschaft (HOT) Earnings Call Transcript & Summary

Good day, and welcome to the HOCHTIEF's Half Year 2021 Results Conference Call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Mike Pinkney. Please go ahead, sir.

Thanks, operator. Good afternoon to everyone, and thank you very much for joining the HOCHTIEF Results Call for the first 6 months of the year. I'm Mike Pinkney Head of Corporate strategy, and I'm here with our Chief Executive, Marcelino Fernández; our CFO, Peter Sassenfeld; and our Head of Capital Markets, Tobias Loskamp, along with other colleagues from the senior management team of HOCHTIEF. We look forward to addressing your questions, of course, but to start off with, our CEO will run us through the key aspects of the numbers, Marcelino, all yours.

Thank you, Mike and the team. Good afternoon to everyone, and thanks for joining us. During the second quarter, HOCHTIEF returned to growth with a 6% sales increase CapEx adjusted, whilst delivering higher profitability and a strongly improved cash flows. The Group ended the period with a solid net cash position and an order backlog of EUR 48.9 billion, which stands above the pre-COVID December 2019 level. Highlights. In the first half of the year, the Group has delivered a nominal net profit of EUR 195 million, plus 29% year-on-year on a like-for-like basis, adjusting for the divestment of 50% of fees, where the remaining 50% holding is equity method consolidated. Operational net profit of EUR 205 million represents an increase of 17%. The Abertis profit contribution of EUR 13 million compared with EUR 18 million loss in H1 2020 and reflects improving traffic trends following the substantial falls seen in the early stages of the pandemic. Margins remained firm across our divisions with the group PBT margin rising from 2.8% to 3% pre-Abertis. HOCHTIEF's cash generation has increased strongly in the second quarter. Net cash from operating activities was EUR 237 million higher year-on-year at EUR 530 million pre-factoring, driven mainly by strong working capital performance. We ended June 2021 with a robust net cash position of EUR 434 million, a EUR 427 million increase during the quarter or around EUR 800 million year-on-year. New orders were almost 50% higher at EUR 14.3 billion, whilst the disciplined bidding approach was maintained across all divisions. As a consequence, the Group's order book of EUR 48.9 billion is up 7% since December 2020. And in fact, now stands above the pre-COVID December 2019 level of EUR 48.3 billion. Cash flow. We can observe the assumptional cash flow performance during the second quarter. Underlying net cash from operating activities stood at EUR 530 million in Q2, almost double the level of the second quarter in 2020. This was driven mainly by a strong working capital performance. As a result, the first half saw a positive net cash from operations of EUR 81 million compared with a minus EUR 69 million last year, a EUR 115 million turnaround. If we examine the last 12 months to adjust for seasonality factors, the Group achieved over EUR 900 million in net cash from operating activities pre-factoring or EUR 833 million at the free cash flow from operations level after Capex. In the first 6 months, net operating CapEx stood at $36 million. Higher comparable figure for last year reflects the 2020 ramp-up of job costed tunneling equipment. And balance sheet. As I mentioned earlier, HOCHTIEF ended the period with over EUR 400 million of net cash. And looking at the moment over the last 6 months, I would highlight that if we adjust for the variation in factoring, which has been reduced by EUR 168 million since December. The net cash position is almost unchanged year-to-date. Given the characteristic second half cash flow bias of the business, it is worth underlying this stable net cash development for the 6 months of the year. Compared with a year ago, net cash is around EUR 800 million higher, and this is up to EUR 552 million in shareholder remuneration. On this subject, we have, earlier this month, distributed the 2020 dividend of EUR 3.93 per share, which is in absolute terms, represents a total of EUR 268 million. In terms of liquidity, the Group's position remains strong at EUR 5.3 billion with a further EUR 2.6 billion of unused credit facilities. And HOCHTIEF funding costs remain attractive, as illustrated by the EUR 500 million 80-year bond we issued in April with a coupon of 0.625%. So overall, we have a solid and derisked Group balance sheet, which leaves us well positioned for the remainder of 2021 and beyond. Our major recent projects in Americas, China joint venture was awarded an EUR 80 million healthcare, Health and Human Services Center contract in California and we were recently recognized by a leading train magazine as the top construction management company for health care facilities in the U.S., a distinction which Turner has earned for 21 years. In 2020, Turner completed $3.3 billion in health care construction projects. And in May Turner secured an ultra-modern office project in Vancouver, in which Amazon will occupy 40 floors. In Europe, HOCHTIEF and its partners are to expand the Line D of the Prague metro for a total of EUR 540 million. The Group has been involved in several metro lines in the Czech Republic and many other European countries in recent years, including Denmark, U.K., Germany and Austria. CIMIC has secured a number of very significant project wins. In June, our PPPS company Pacific Partnerships, along with CPB Contractors and our services business Ventia, announced they had been selected as a part of a consortium as the preferred proponent to deliver the Northeast rolling 30-year PPP in Melbourne. Revenue to CIMIC Group is expected to be around AUD 4 billion across the construction and operations phase, which runs to 2051. And 2 weeks ago, Ventia, which is a 50-50 investment partnership between CIMIC and co-investor, also won a 10-year or EUR 100 million per annual long-term maintenance contract for natural gas facilities in Western Australia. Joint venture, including CPB and UGL has been selected by the New South Wales government to deliver a stage 1 of Sydney's M6 motorway generating revenue for CIMIC to company's worth AUD 1.95 billion. And early this month, Thiess was selected as the preferred mining services contractor for Mount Pleasant Operation, New South Wales with $925 million over 4.5 years. Order book. The Group's order book has evolved in a very positive fashion ending the period at about EUR 49 billion. This is 7% higher compared with December 2020 with solid increases in all divisions year-on-year. Furthermore, our backlog now stands above the December 2019 pre-COVID level of EUR 48.3 billion. New orders of EUR 14.3 billion are up by nearly 50% on an FX-adjusted basis, led by the exceptional growth in the Asia Pacific division where EUR 6.6 billion of contracts were secured. The project was won by developing the first 6 months of 2021, represent 1.2x that were done during the period. Overall, almost half of our order book is located in North America, with a further 43% in Asia Pacific region and 9% in Europe. Let's look at Americas. The division achieved a sound performance in the first 6 months of 2021 with an outstanding level of cash flow generation in the second quarter. Sales during the first half of the year were EUR 6.7 billion, we have increased year-on-year in the second quarter of 2% in local currency terms. Operational PBT advanced by 6%, FX-adjusted to $164 million in H1 2021 with a robust margin reflecting the solid nature of the construction management activities, which account for the vast majority of the division's business. Net cash from operating activities per factoring of EUR 116 million increased by EUR 91 million year-over-year. This reflects very strong momentum in the second quarter where almost EUR 400 million was generated, a year-on-year increase of EUR 216 million. And looking at the last 12 months, to adjust for seasonality effect, net cash from operating activities is a remarkable EUR 673 million, notwithstanding the impact of the pandemic. Americas continues to have a very strong balance sheet with a net cash position of EUR 1.46 billion at the end of June and which has increased by EUR 220 million year-on-year and EUR 361 million during the second quarter. New orders increased by 40% year-on-year. FX-adjusted to EUR 6.8 billion, with work secured in the last 12 months, representing 1.1x work done. At the end of June, the order backlog has stood at EUR 23.4 billion, up 9% in local currency terms compared with June 2020. And looking forward, we anticipate a solid 2021 performance at Americas. In addition to the ongoing growth in the healthcare segment, life sciences continued to attract funding from both public and private entities to invest in new and more modern facilities. New York City, for example, announced its commitment to invest more than $1 billion to facilitate the growth of life sciences industry in June 2021. The rapid current expansion of this segment is part of the long-term trend, driven by several factors, including COVID and aging population and a drive towards more technology adaptation in order to bring down healthcare and pharmaceutical costs. As the number of -- as the #1 healthcare builder in the U.S., China is well positioned to capitalize on these terms. The data center market also continues to thrive and benefit from ongoing digital adoption and demand search. Over 25 states in the U.S. of specific tax incentives for building data centers to attract investment. In the last 12 months, also the top 20 largest operators spent a record-breaking $150 billion in capital expenditure with the long-term backlog. China continues to benefit from its strong technology client base and the investment in new facilities. On the aviation front, large scale -- large clients are investing due to the need to modernize and improve airports that are nearing the end of their services -- service life. In addition, the Federal Aviation Authority has identified right number of existing public airports and several proposed new ones that are expected to drive spending estimates to over EUR 40 billion for price that will be launched over the next few years. Finally, in Americas, the nearly EUR 1 trillion infrastructure bill was passed by the House in June and is expected to be confirmed by the Senate in the coming weeks. While it will take time until this investment actually makes an economic impact, the opportunities will be numerous and significant. And as we confirm our operational activity guidance at Americas business for 2021 of EUR 320 million to EUR 350 million. Asia Pacific division and CIMIC results were published last week. Revenues increased by 4.8% to AUD 4.6 billion in the first half of 2021, driven by strong growth in Australian construction and services. Net profit after-tax impact of AUD 208 million compared with AUD 205 million in the comparable period. EBITDA, PBT and NPAT margins were resilient at 10.1%, 4.5%, respectively. Free operating cash flow pre-factoring improved by AUD 166 million as in H1 2021 compared with the first 6 months of 2020. Positive cash flow momentum reflected a normalization of new projects awards and a reduction in CapEx and lower financial costs. HOCHTIEF Asia remains a constraint. Adjusting for this Q2, cash conversion would have been more than double the 34% reported. A net capital expenditure of AUD 30 million reflects current CapEx spend for job-costed tunneling equipment. Net debt ended the period at AUD 272 million to AUD 172 million, with the year-to-date movement, including the unwinding of AUD 243 million of factoring during the period. New work of AUD 10.4 billion was awarded to CIMIC during the first 6 months of 2021. This already exceeds the AUD 6.8 billion secured for the full 12 months of 2020 like-for-like. As a result, the June -- or the book stands at AUD 33.3 billion, a 10% increase so far in 2021. As of the end of the period, the pipeline of relevant tenders to be bid for or awarded is approximately AUD 70 billion for 2021 and beyond, including AUD 115 billion of PPP opportunities. And CIMIC confirmed its NPAT guidance for 2021 of AUD 400 million to AUD 430 million subject to market conditions. HOCHTIEF Europe has delivered a solid performance in the first half of 2021. Sales advanced slightly to EUR 600 million, whilst maintaining the division's disciplined approach to bid in for new projects. Operational PBT of EUR 26 million was a line with a comparable period of 2020 and with a solid margin level. The movement in net cash from operating activities mainly reflects the seasonality in the first half of the year, with the core business showing an improvement of EUR 40 million year-on-year. Over the last 12 months, Europe has generated over EUR 100 million in net cash from operating activities. At the end of June, the division's balance sheet maintained a strong net cash position of EUR 484 million, an increase of over EUR 100 million compared with a year ago. New orders in the period of EUR 837 million were at a similar level to H1 2020 with the last 12 months showing EUR 1.9 billion of new work secured, which is equivalent to 1.2x work done during the period. The divisional order backlog ended June 2020 at EUR 4.5 billion, an increase year-on-year of 11%. For 2021, we expect operational activity for Europe of EUR 40 million to EUR 60 million. Now we are going to summarize the performance of Abertis, which shows a strong improvement. Average daily traffic in H1 2021 was 22% higher year-on-year due to the impact of mobility restrictions introduced last year due to the COVID pandemic and benefiting from the resilience afforded by the Group's diversified portfolio of toll roads and an increasing heavy vehicle traffic. Operating revenues rose 60% in Q2 year-on-year and 26% in H1 2021 on a comparable basis, 20%, with EBITDA up 91% year-on-year in Q2 and 40% in H1 2021. On a like-for-like basis, including the full consolidation of RCO, Mexico and ERC U.S. acquired in 2020, EBITDA was 29% higher year-on-year. Abertis' net profit pre-PPA amounts to EUR 262 million for the half year, almost double year-on-year, mainly due to improved operational performance and traffic trends. Abertis profit contribution to HOCHTIEF for our 20% stake was EUR 13 million in H1 2021, with a strong recovery of earnings in Q2 to EUR 60 million, up plus-EUR 35 million year-on-year. A dividend payment of EUR 601 million was made in April 2021, of which HOCHTIEF received its share of EUR 119 million, and the proposed dividend policy for 2022 is EUR 600. Our 2021 guidance in relation to the contribution from our holding in Abertis is unchanged. Now I want to take the opportunity to address environmental, social and governance. HOCHTIEF is one of the world's leading infrastructure groups in relation to ESG. Sustainability specifically one of our guiding principles for how we approach and manage our business and cornerstone of our strategy. A long-standing commitment to sustainability, reflected, for example, by our listing in the Dow Jones Sustainability Index for the last 15 years. In addition, MSCI has awarded HOCHTIEF a strong AA ESG rating and Sustainalytics list, as a top 10% company in its global sustainability ranking for our industry. Furthermore, our Group has also been recognized for these efforts on Climate Change by CDP Carbon Disclosure Project. In 2021, we are further accelerating our ESG efforts by leveraging that digital technologies we are developing in order to continue our business transformation. The Executive Board is leading this twin transition, green and digital. We are updating our efforts with our 2021, 2025 sustainability plan and are working on carbon reduction targets and tracking a scope 1, 2 and 3 greenhouse gas emissions in the group. Our sustainability plan will also respond to the requirements and recommendations of regulators such as the new EU Taxonomy for which HOCHTIEF is already making the necessary efforts to respond to the detailed disclosure obligations. Our customers value our range of services on the environmental front, HOCHTIEF generated revenues in 2020 from green building projets worth EUR 8.3 billion or over 1/3 of Group sales. We are the leaders in green building in the U.S. and embrace the trend towards making the industry more sustainable. Turner has completed over 1,200 green building projects, and it has more professionals, which are LEED-accredited the key sustainability metric in the U.S. building market than any other construction firm. We are working together with our client, suppliers and subcontractors to significantly improve the environmental footprint of our activities. For example, last week, Turner announced that it's flagship USD 1.5 billion New York Javits convention center has been awarded a LEED Gold certification at the U.S. Green Building council and serves as a model of environmental efficiency and sustainability. The focus on the secular economy is illustrated in display by the 75% of all construction waste, which was diverted from landfills for reuse or recycling and construction materials that were chosen with sustainability characteristics, including highly recycled content and locally sourced and sustainably harvested wood. Other highlights of HOCHTIEF include the use of 3,000 solar panels, water efficiency and the environmental quality and energy conservation. The social component of sustainability at HOCHTIEF has just been further reinforced by our updated procurement by its policy, which is available on our website. Our staff's diversity in terms of age, gender, citizenship, religion and background is something we, as an international group, care deeply about. Governance is also a priority for us. At our AGM in May, an updated compensation system for the Executive Board was approved, including an ESG component for the variable remuneration for this -- for the first time. Compliance is also key in delivering our corporate principles, particularly in terms of our codes of business conduct, and we attach great importance to ensuring that our high standards extend to entire supply chain and that human rights apply to everyone who works on our projects. We will keep you updated on our progress with all these important topics. And now to conclude, with solid margins, increasing cash flow and robust order book, supported by a rise of almost 50% in our new orders during the first half of 2021. We are positive on the outlook for HOCHTIEF. We confirm our guidance and expect to achieve an operational project for 2021 in the range of EUR 410 million to EUR 460 million. This represents an increase of approximate EUR 50 million to EUR 100 million compared with the EUR 359 million of 2020 like-for-like. In terms of earnings per share, our guidance is equivalent to a profit of between EUR 6 and EUR 6.75 per share for HOCHTIEF. We continue to actively assess our capital allocation options of which shareholder remuneration remains a key ingredient. Early this month, HOCHTIEF paid its dividend for 2020 of EUR 3.93 per share and unchanged payout ratio of 65%. This brings the total dividend distributed by HOCHTIEF to its shareholders since 2012 to almost EUR 1.9 billion. So in summary, we are positive about the outlook for HOCHTIEF, given the improving trends in our order book, cash flow and profit performance as well as the opportunities provided by the numerous stimulus packages approved by the governments and the identified tender pipeline of relevant price worth EUR 600 billion for 2021 and beyond, supported by over EUR 200 billion in PPP projects. So thank you very much, everyone, for listening, and I now welcome your questions.

So we're ready for questions. Thank you, operator.

[Operator Instructions] We'll now take the first question from Luis Prieto at Kepler.

I had a couple of questions. The first one is, could you please describe a bit more your positioning towards the used government's infrastructure plan? In other words, could we see Flatiron, considerably expanding operations because of it to benefit from it? And would you also expect Turner to be a beneficiary of a plan to any extent? And the second question, the 2 main shareholders of Abertis, Atlantia and ACS, will obviously soon have very material financial resources after the completion of the respective, very relevant disposals. This opens various hypothetical scenarios, as we can imagine, out of this level in which you also have a stake. So my question is, what is your strategic stance in this context?

Luis, it's Mike Pinkney here. Let me take that first question. So obviously, the Biden infrastructure plan, which looks to be the one -- sort of $1 billion to $1.2 billion area. It's been agreed initially, but it has to get through the Senate, and they're still discussing it. So we'll have to see exactly what that looks like. But having said that, clearly, there's a focus on transport infrastructure. And that will definitely provide opportunities for Flatiron, obviously, which is focused on civil engineering. But also, it could provide opportunities for Turner as well. So Turner does a lot in airports, in fact, in joint venture with Flatiron, and there's increasing levels of investment as things stand now, so there could be additional opportunities on top of that. And then there are other areas. The infrastructure plan is infrastructure in a fairly broad sense. And so there's also talk about increasing investment in things like education and health care, which obviously is very important at the moment. So we think that there could be additional opportunities. But as things stand now, the order book at Americas is up at nearly EUR 23.5 billion. We've seen 14% growth in new orders in the first half of the year. So things look good, and there could be some additional upside.

Yes. And then obviously, we are going to take advantage of both no civil and building opportunities, they will come. The pace is something that you know that up to know, is working very well. We'll see if this kind of public, let's say, pushing is coming to the market very soon or through the next years. And then obviously, we are ready for taking advantage of these opportunities. In regard of -- Luis in regard of your second question, obviously, our partners have now -- or they have for what they stated that they are ready, let's say, to continue their journey. And for us, as you know, Abertis is a very strategic investment, and we will be totally open to analyze any possibility in the future, but we need to wait and see. And obviously, we don't know right now what is the -- what are the next steps in regard of this, but as I said for us about this is -- the investment and we are very happy with this position.

We'll now take the next question from Christian Korth at HSBC.

I have 3 questions. The first is also on the Americas, if you could please explain your view on commercial construction and the prospects of the business in Americas? Has anything changed strategically with COVID? Or is the market still in a good shape and should be going forward? The second question is on the cash generation in Americas. I see that about EUR 395 million net cash before factoring versus an EBITDA of EUR 91 million and an EBIT of EUR 70 million, I just want to understand why that cash flow is so strong. Is it from working capital? Are there other reasons that explain this? And the third is on capital allocation. I just wanted to ask if you have any plans potentially on share buybacks, which would trigger these? Are there any thresholds? Because I think you have a good cash flow and a good net cash position. And apparently, I'm not sure if there's much need for additional cash on the balance sheet. So that would be my questions.

Christian, it's Mike again. Thanks for your questions. Firstly, you were asking about the commercial construction market. I think what I'd highlight here is that one of the areas that's growing very strongly, as Marcelino highlighted earlier is the data center market. And that is growing very strongly. We've seen the figure. I think Marcelino mentioned EUR 150 billion of CapEx in the last 12 months by the sort of the largest operators, that's a record level of investment. So that is now representing a stronger part of the overall, if you like, commercial market for Turner. So commercial data and retail represent just over 40% of the backlog of Turner at the halfway stage. But a big chunk of that now is data. And retail has also been benefiting, obviously, indirectly from e-commerce to a degree. So I think that the -- there are obviously different parts of the commercial sector. But certainly, the data center one is growing very strongly and Turner is obviously very well positioned there. In terms of...

If I may, Mike. What is -- it is performing very strongly at both markets, the private and the public one. But the private market that Mike was more or less explaining to you that is affecting more Turner, but also the public. And the public is also starting to move ahead. So there is a lot of good opportunities. The market is really alive. It looks like after the COVID, they want to say -- to regain a little bit of the time lost. And our position in the market is very, very good and outstanding. And one of the things is like, you know, that the market with this amount of new bids coming to the market, the market is going, let's say, to respond in a very, how can I say, good way and no need to be very aggressive because of this amount of new breeze coming to the market.

And the second one would be on the cash flow.

On the cash flow, thanks, yes. So you were highlighting there, Christian, the -- I think, in particular, the second quarter figures for cash flow. I mean, obviously, there's -- as you're very well aware, an important seasonal effect, which is concentrated in the first quarter. If you look at the first half, then you can see that the net cash from operating activities, pre-factoring is around EUR 115 million. And that compares with, for example, EUR 160 million of EBIT. So there, if you like, it's a little bit more aligned. But as you know, the Americas cash flow performance in the last couple of years has been very strong. And as you can see from these figures today that we've published, it continues to be. So there are always timing variations during the year, on a quarterly basis. But year-on-year, first half versus first half, we're up about EUR 90 million of the cash flow pre-factoring level. So the outlook there, I think, remains very positive.

And even -- let me just complete this -- and even in the second quarter, we finished 2 significant big projects. And this was really a very, very good, say, momentum in regard of cash collection because of closing these 2 big outstanding projects, meaning that, what -- this is timing effect that Mike was more or less explaining that, obviously, you cannot say, look at a quarter, you have to look a little bit more longer. And if you look at the last 12 months, you'll realize that the position is going -- is stable and continues being very good. Sometimes, you have some variations, sometimes up, sometimes down, but the position is very stable. And the third one is about capital allocation and as well, you know that we've been always in our strategy, very focused on capital allocation opportunities. As you said, there are several ones, including what you named in regard of buybacks, et cetera. But the market now is restarting. There are a lot of new possibilities. We are really deeply analyzing all of them, obviously, including also the capital allocation in our own company. But the idea is before, say, making a decision to deeply analyze these opportunities. And finally, we will use these funds we consider in the best way for us, okay?

[Operator Instructions] We'll now take the next question from Victor Acitores at Societe Generale.

I have some questions if you can probably help to me. The first one is on asset disposal has been in the market, the chances in CIMIC in order to dispose or to go to an IPO or any transaction on Ventia? So if there is any color on that? That could be the first question. The second, on the calls with clients usually comes to the conversion, the potential risk on inflation in the industry for the raw materials. If you can comment on that, if you see any risk on your margins, how are the stands under procurement on the Group? And the third one, finally, is that you said, Marcelino, that you are currently working on the ESG targets on the scope 1, 2 and 3 emissions. Is there any calendar date in order to provide those targets for the market?

Thank you, Victor. Maybe regarding CIMIC, our CFO, can give us some kind of color.

Yes. Victor, it's Peter here. Yes, with regard to the to Ventia, there is an IPO in preparation. This IPO will be -- is in preparation towards the end of the year. So we will see in the next couple of months. I mean, they are now talking to investors, testing the market, preparing a prospectus. And we will see how it goes, but this is something rather for the end of the year.

And, this is one possibility where...

There's one possibility...

Of checking back with the...

There are many others with -- I mean, there's also an M&A possibility, and there's also a possibility if we can't really generate value that we keep our stake, of course.

Very good. Then inflation, raw material, maybe, Mike, you can provide some color on that?

Absolutely. Yes. In terms of sort of raw material cost inflation, et cetera. I mean the first thing to say, obviously, is to remind you that about 60% of our revenues originate from cost plus fee-type contracts in the Americas. That's basically driven by Turner. For the remainder of our construction services jobs, we apply various tools for risk mitigation as part of our risk management to focus on, essentially, on those risks that we can manage. And those sorts of tools include price escalation clauses. In Australia, enterprise bargaining agreements are normally signed with the unions for the lifetime of specific projects and prepurchasing of materials and subcontractor capacity at the time of the project awarded is also one of the ways to manage this risk. In addition, we've shifted our contract portfolio in construction, as you know, away from sort of more lump sum contracts towards much more alliance, collaboration and partnering-type approaches, where the risk is more equally shared essentially. So we've got a diversified business model, we're very focused on a rigorous approach to risk management. So we think we're very well positioned to manage sort of cost pressures.

And Victor, in regard of your ESG question, obviously, we are now building our sustainability plan, 2021, 2025. We are aiming also to have this plan ready by the end of this year. We are working in a collaborative way in the different areas. You know that the ESG has to be applicable in the overall scope of the company. We are a global company. We have Europe, we have America, we have Asia Pacific. And obviously, the criteria in these regions are not going to the same speed. We have, let's say, to adapt ourselves to the different speeds in order to, say, to continue being competitive in the markets. But our plan is just to create this sustainability 2021, 2025 plan, our objective by the end of the year, having clear view about how can we develop, how can we understand this within the company's culture. This is one of the things we're aiming to do. We want to be sustainable because the culture of the company is to be sustainable. We are introducing, at the same time, the ESG environmental social and governance teams, together with our digital transformation. You remember that we started with our company Nexplore more than 3 years ago, that Nexplore is really well involved on that, not only in digitalization as a whole, but also is helping very much in introducing this new criteria that are going to say, to be so useful for us for competing in the different markets. But at the same time, we need to have the right tools for giving to our people, to our projects in order to say to make the task really, really available for everybody. Then we are really excited on that. We have a very tremendous plan and ambitious plan, but we will see -- we will update you in the next quarters, all the things that we are covering, but we continue -- it's very important for the transformation in our company for being a really sustainable company for the present and for the future.

[Operator Instructions] We'll now take the next question from Tobias Woerner of Stifel.

Just 2 questions, if I may. Number one, how do you think about capital allocation in context of share buyback option of your shares? You look attractive. And it'd be interesting to hear of how you put this in context of things such as Abertis or the recent consideration of ASC and so and so forth? The second question, is probably something you can't answer, but maybe give us a sense, is about the Atlantia shareholding and yourself, which probably creates a bit of a shareholder hangout this time. And how do you see that? And then maybe one last question. Obviously, Australia is a big market for you at the moment. And it seems that when you look at the latest traffic data in Australia, that the lockdowns are starting to play out a little bit. How do you see that come out?

Tobias, it's Mike. So maybe just to start off with the lockdowns that you mentioned there in Sydney and New South Wales to be specific. The Juan Santamaria, the CIMIC CEO highlighted on his conference call last week, that basically, the government is sticking or is aiming to stick to a 2-week period of lockdown, which incidentally would finish at the end of this week. And with the intention to work with industry to make sure it can return to normal as soon as possible afterwards. This is requiring that the full collaboration between all the parties. And is -- yes, it seems to be that -- the government is saying that it was going to support this by compensating all reasonable and fair claims. So the view really from Juan was that the lockdown shouldn't be affecting in the industry to any great extent. And that continues to be the view.

Okay. Tobias, as I said, regarding, for instance, the capital allocation opportunities, share buybacks, et cetera, yes, it is a good opportunity. It's a great opportunity. The share price is really attractive, but we are also analyzing other capital allocation opportunities that we consider at the same time that are very, very interesting for our shareholders. That's why we are not really making a decision right now. And then we want, let's say, to look at how the market is developing in these opportunities that we are foreseeing right now. And in regard to, obviously, it's a question to Atlantia, but Atlantia has been a very good shareholder to us. We are very happy having the Atlantia on board, and we don't know exactly what they are trying for the future, but I cannot let's say, give you more color on that because it's a question more for Atlantia than for us.

We'll now take the next question from Luis Prieto at Kepler.

Again, Luis Prieto, follow-up question. We have seen your factoring balance decline for some time now. And I was wondering what your desired factoring balance level is at the moment or in the future?

Yes. Luis, it's Mike again. Yes, as you said, there's been a strong reduction in the factoring over the last couple of years. You've seen a reduction year-to-date from January to June of EUR 168 million. I mean, as Marcelino was highlighting. If you adjusted for that, the net cash position in December to June, this is the most unchanged. But basically, it's mainly in Australia. And the expectation is that it will basically vary as a function of revenues, but they're looking at all the most sort of efficient structure that's appropriate for the business. So there may be some additional variation beyond the revenue change that you see.

But more or less, following always the revenue curve, let's say, if the revenues are going up, maybe you can, let's say, follow with a factoring with the revenues and if it's going down, following -- we don't have any estimation. We don't have any specific target.

That concludes today's question-and-answer session. I'd now like to turn the call back to Mr. Pinkney. Please go ahead, sir.

Okay. Well, thank you very much, operator. Thanks to everyone for joining us and for all your questions, and yes, we hope everyone can have a good summer and speaking will be speaking to you with the Q3 numbers.

Thank you, bye-bye.

Yes. Thank you very much to all of you and then rest and have a good summer. Thank you.