Obrascón Huarte Lain, S.A. (OHLA) Earnings Call Transcript & Summary

Good day, dear shareholders and thank you for coming to the General Shareholders Meeting for 2019. We're in Madrid in the corporate health quarters of the company and for reasons that have been published and known by everyone. We are holding this session in the second round and fully remotely due to the declaration of the state of alarm and due to the effects of the terrible pandemic of coronavirus. You dear shareholders allow me and before we deal with the formalities for constituting the General shareholders' meeting, which are the usual ones, and this actually we'll make in a few minutes. I'd like to share with all of you a few thoughts. These thoughts includes some basic messages for solidarity, sadness and encouragement for a recovery. Solidarity because all of us somehow had close people to us, acquaintances and friends who have suffered in the wrong flash the terrible pandemic we have gone through. And these Board of Directors that I chair and this company must express that solidarity and extend it to all these people. Of course, we also feel sad for all of them, and we express our solidarity for all the terrible losses, human material they have experienced in this pandemic. And as I said at the beginning, I'd like to give a message of hope for the future and also a message of hope in OHL we'll talk about the new partners that have joined us who are today with us also from the Board of Directors. We will talk about the future projects that are so exciting that we have together with the Deputy Vice President and CEO, Mr. Fernando Tallar and our global [indiscernible], but mainly a message of optimism for the future in Spain. We've fought in worse battles. That may be rhetoric message. This is a terrible battle. And 4, 5 months ago, no one could have imagined this could happen. But I'm sure that in Spain, we've gone through difficult times before, and we will be able to get ahead this and forge ahead with this situation and be reborn again, maybe not from the ashes, but from a difficult situation to be what we've always been. And finally before we go to the constitution formalities, I'd like to comment as well and express my solidarity a bit closer to home, and this is a message of gratitude. Lastly to the whole health care staff, all the doctors, and all the employees even in our company who have worked extremely hard, caring for victims of the pandemic. I also wanted to acknowledge the task of [indiscernible] and be grateful to them also to the security corps, the police and the civil guard who have experienced firsthand the pandemic and who have also suffered the loss of colleagues. And of course, a very heartfelt message of solidarity to them. And to everyone who has had the misfortune of losing loved ones. Having told the Board this, but together with all the shareholders who are joining us remotely could we please stand up and devote a minute of silence to the memory of all the victims of COVID-19. Okay. Thank you. So I would like to repeat our recognition to the effort of everyone who, in the last few months have lost their lives. Some of them helping the big teams, taking care of them and keeping us afloat. So without further, I will give the floor to [indiscernible]. So we can begin with the formalities for constituting the general Shareholders meeting. [indiscernible], you have the floor.

Thank you, dear president. Good morning, good day. Due to the declaration of State of Alarm on March 14, 2020 through the Royal Decree 463-2020. Send it several times, you see long going today. Several measures for limitation, restriction or recommendations of the authorities, public measurements have been established regarding the mobility of people or regarding the meetings exceeding a certain number of people affecting all or parts of the national territory. The target to reduce and limit expansion of COVID-19 for that reason. And to keep the right of the shareholders, to attend face of face through representatives. And safeguard the health and safety of shareholders, employees and [indiscernible] to be in the preparations operation of the General Shareholders Meeting, the Board of Directors agreed to hold the [indiscernible] of the general shareholders meeting in the corporate headquarters of the company without the physical attendance of the shareholders or any other person except for anyone. Extremely essential for the organization, giving the possibility to attend remotely, allowing them to connect in real-time and participate in remarks with the company, has given shareholders the possibility of using beforehand the procedure of the [indiscernible], voting and remote assistance or attendance, allowing shareholders to participate and vote in the general shareholders' meeting according to the rules [indiscernible] by the Board of Directors and the procedures established for its functioning published in the corporate website. Likewise, the General Shareholders' Meeting, can be followed live as well as through the recorded version through the corporate website. Here, in this table we have Mr. Juan Villar-Mir de Fuentes, the CEO; Mr. José Fernando Galar; and myself, José María [indiscernible] as secretary of the Board. We also have the Deputy President, Maria Fernandez; and remotely we have the rest of the members of the Board of Directors: Mr. Escalon Guardado; Mr. [indiscernible] Odeon; Ms. Carmen Andres Conde; Mr. Luis Fernand; Martina [indiscernible]; Mr. Ju Auristatin Amodio Herrera; Mr. [indiscernible]; and Mr. Juan Antonio Santamaria Sanchez. In agreement to the mentioned Royal Decree, and the appropriate law relating to the state of alarm and the consecutive extensions as well as the joint member of the College of Registrars and the National Commission of duties markets in Spain on April 28, I need to draw up the minutes here. And we also have the notary. Mr. Jaime Ricarte [indiscernible] to help us with that task. Thank you very much.

Thank you, Mr. [indiscernible]. So notwithstanding the singularities mentioned before, the general shareholders' meeting is held of course in agreement with the provisions established in the bylaws and the regulation of the General Shareholders' Meeting. The announcement of the call of the general shareholders' meeting in agreement with articles 173, 177 and 516 of the Capital Corporations Law and Article 14 of our Bylaws was published in the official bulletin of the Mercantile Registry on May 11, 2020. And on May 10, the call was [indiscernible] to the corporate website. And the application was kept onto the acceleration of this board meeting of the shareholders' meeting, May 10 in agreement [indiscernible] the securities market law. The call of the meeting was communicated to the Board of the National Securities Market Commission [indiscernible] on June 5, 2020. In the Mercantile Registrar Official Gazette this was published, and was notified to the securities market national community, the fact that these meetings will be held remotely. Taking into account the extension of the state of alarm declared by the [indiscernible] Bob mentioned, recent limitations and restrictions imposed by COVID-19. The text of the call to the general shareholders' meeting and its complements have been available together with investor documents regarding the [indiscernible] shareholders' meeting, they were in the corporate website and in the corporate headquarters of the company may have been given out for free to whoever requested them. And we deem them as read. The celebration of the general Shareholders' meeting is [indiscernible] by Articles 159 to 203 and 511 [indiscernible] to 527 from the Capital Corporation's Law; and in the case of OHL, by articles 11 to 19 of our company bylaws as well as the regulation of the general shareholders meeting. Together with these articles. And as we've said before, done before in previous years, in the year end ordinary shareholders' meeting, the President and Secretary will be the people who have those responsibilities of the Board of Directors of the company. That is the President of the Board; myself; Juan [indiscernible], who is speaking today, right now and the council who you just spoke. The secretary of the Board, José María de Cobia. Max, as we usually do, this ETA will inform the here are the shares present and represented in this event. Mr. [indiscernible], you have a floor.

Thank you. [indiscernible] shares representing this event together with this article 182 of the of the capital corporations law shows 23 shareholders present, holders of 42 million shares, representing 14.6% of the social capital and 226 shareholders represented, holding 51 million shares representing a total of 17.8% of the social capital. Therefore, the treasury stock of the company is 584,000 shares. [indiscernible] for considering the general shareholders' meeting, excluding the voting right shares, together with the current law. Therefore, the present represented shareholders are 449 and the present represented shares are 93.7 million representing 32.8% of the social capital. Reflect the attendance of the shares present and represented -- representing that percentage which is a legally sufficient quorum for celebration of the general shareholders' meeting in the second round. With the corporate Bylaws and the limited company's law. We will vote an agreement, the 11 that needs a reinforced quorum, and we need at least 25% of the social capital. And these has been complied with since we have 32.8% of the social capital. Together with was cited in Article 17 of the Bylaws and Article 194 of the Capital Corporations law in compliance with Article 21 of the general shareholders meeting regulation. We say that the members of the Board of Directors have the presentation of 93 million shares, representing a total of 99.8% of the shares attending these meetings. And we stated the right of the shareholders to check if they wish, the least of present and represented shares. In addition, we inform the shareholders that together with the information given by the administrative services. There has some been and the advanced banditry are shareholders for remote participation. Therefore, there are no shareholders participating in that way.

Okay. Thank you very much. I agree. Since we have justified the request of the present existence of a sufficient quorum for holding this general meeting, this presence needs to declare and declares legal and [indiscernible] constituted the General shareholders' meeting of OHL in the second round, to get into the analysis and the approval, if appropriate of all the elements and items, including the agenda. Next, we give the floor to the notary public, Mr. [indiscernible] -- from Americas from the Madrid Association of Notary Publics, Mr. Jaime Ricarte [indiscernible] to give the appropriate legal warnings of the notary public.

Thank you. Whether any other shareholders has any revelation of process regarding the segments of the President and the Secretary on the number of shareholders concurrent and the presence in represented social capital. If so, please let me know thank you. Thank you. There are no reservations. Therefore, for now on the shareholders, we're constituted in General Shareholders' meeting to deal with the matters included in the agenda. Finally, I'd like to inform the shareholders that after the speech by the CEO of the Secretary, will compile any questions or comments if ever there may be. Remotely, nothing has been expressed. And since there were no questions or comments, or no replies either, no one has registered to take the floor.

And without further ado, I go to the celebration of the Board. So we're here with all of you to to report on the year 2019 and to refer to the most relevant facts and the highlights that took place in the year. For the first time, taking into account the state of alarm, the consequence of the coronavirus pandemic, these shareholders meeting is being held fully remotely. And my speech before I give the floor to the CEO, I'd like to share with you a series of thoughts. The first one, as I mentioned in the beginning and I'll repeat now is focus on 2020 and is geared to mention the serious pandemic caused by COVID-19 as you know, has had a very serious global impact. In this regard, I'd like to express my deepest condolences to all the families that have been affected by the serious disease. And I'd also like to highlight the bigger [indiscernible] made set a few minutes ago by the health sector to face this pandemic. I'd also like to extend these words of gratitude to the rest of the sectors that have allowed us to meet the basic needs of society with our daily activities. The shareholders regarding OHL and need to state the company created together with the CEO. At the very beginning, even before the declaration of the center of alarm, the company created a crisis committee to mitigate the situation and preserve the health as a main objective. The half of our employees and collaborators. Therefore, we implemented a series of actions. I mean, to limit the impact of the pandemic. Of course, as I said before, in personal matters but also in the economic parameters. These latest actions that are comprised mainly in the -- in [indiscernible] social, health, labor and financial will be detailed in this page by the CEO of the company, Mr. Jose Antonio Fernandez Gallar. Likewise, the shareholders, I'd like to thank from the bottom of my heart to all the employees of OHL, the great effort and commitment and sacrifice that they have shown in each of the communities will be present through these very serious pandemic. In his personal and very intense recognition. The second reflection that I'd like to share with all of you is focused on the fact that took place last May. A comment that I made at the beginning today, and that affects the shareholder structure of our company, OHL. As you all know, last May 21, Grupo [indiscernible], reference shareholder of the company. Since the acquisition of Obrascon in 1987, communicated to the national Spanish securities market committee that he had entered into a contract of share purchase of OHL with 2 companies of the Amodio family. Therefore, the Grupo [indiscernible] stopped being the reference shareholder in OHL and he gave that position to the Brothers, Luis Fernando and Mauricio [indiscernible] who have acquired with a long-term perspective, a total of 16% of the capital of the company. With Grupo [indiscernible] being the second shareholder with a 14.6%. Likewise, as you all know and it's been communicated to the market, the Grupo [indiscernible] has given them irrevocable call options on OHL shares, representing altogether up to 9%. And in addition of the social capital, so that the Amodio family may buy them many times from now until November 22, 2020. [indiscernible] approach the second topic, I'd like to share with you my third comment. Focus on thanking the trust given to this Board of Directors, the OHL management team and the 18,782 employees that make up the company in the framework of managing this company throughout 2019. We're aware, and myself personally especially, but 2019 has been a year where OHL has managed to get a better discipline. And as you may know has in [indiscernible] gross operating profit, EBITDA, positive in all of its divisions. Which haven't happened actually in previous years. So there is a clear change of trend. All that allowed this company to be today much more predictable and stable than it has been before. This context is being hard by the satisfactory, but I need to share with you the [indiscernible] of having met the objectives and targets of these Board of Directors have set for 2019. And we are working with hope and trust towards achieving our main goals which are profitability and financial stability. And to achieve so we'll keep counting with the support, as we've done for many years amongst other things, on a solid independent corporate governance and an even more reinforced compliance system. On this last point, I'd like to share with all of you the shareholders that in 2019 OHL has renewed his [indiscernible] system and has obtained certifications, ISO 7001, for the anti corruption management system and the UNE 19601 for the [indiscernible] compliance management system. Need to add to that. Our ongoing revision of our anti-corruption policy and the update that is pretty much permanent of the internal system for crime prevention. All that, the shareholders is framed within a policy to operate guaranteeing responsible actions. In terms -- in social terms, in corporate terms, but also in environmental and governance terms, allowing us to get to know and answer the changes and needs and expectations of our stakeholders. Therefore, I need to thank all of them. Our ladies and gentlemen, shareholders, in the name of the Board of Directors that I have the honor to chair. And I'd like to thank you for your firm commitment with OHL. I'd also like to thank you for your trust dear shareholders and for the trust of anyone who supports this company so that we can carry out our business plan and work towards that path of profitability that I was referring to earlier. So after sharing these thoughts, we continue with the general shareholders' meeting. On next, we're going to deal with the following items. Some of them have already been mentioned regarding the measures taken regarding COVID, the highlights of 2019, the results of 2019, the events post 2019, pillars and future targets, corporate governance and sustainability, project milestones. And then, of course the agreements agenda that we bring to this to GSM. With your permission, I will continue mentioning other topics. But first of all, I give the floor to deputy Vice President and CEO of the company, Mr Antonio Fernandez Gallar who will explain his speech, the first chapter, the measures taken regarding COVID-19. He'll also talk about the highlights of 2019, 2019 results, the fourth item, the events post 2019; and fifth, pillars and future targets. So Mr. Fernandez Gallar.

Good day, dear shareholders, and good day, dear board members at OHL. Thank you much for being here today, and thank you for your attention. I'd like to begin my speech by joining the message of our president regarding the serious pandemic caused by coronavirus. And of course, sharing my deepest condolences with the families of active and my gratitude to everyone who has enabled us to face this serious disease. Mainly, I'd also like to share my gratitude. With all of OHL employees for their deep commitment and effort with the company despite the harsh measures that we need to implement to alleviate the impact of this pandemic as they will be seeing on the OHL account in the year 2020. First of all, I'd like to highlight the measures taking as a consequence of COVID-19. Regarding the essential services that OHL has developed as well as all the other internal actions that the company has initiated. Regarding the first item, the measures that we have taken due to COVID-19 regarding essential services for society. I'd like to highlight that OHL is a reference in hospital building. In particular, we have more than 9 decades of experience where we have built more than 150 new hospitals, equivalent to 6 million square meters and more than 60,000 beds. During the state of alarm, we have been given essential services for the company. In our division OHL Services is allocating nearly 10,000 employees to citizen contracts, management in hospitals, care homes and home assistance services. To that, we add our [indiscernible] in cleaning, maintenance and urban services. So we'd like to thank them all. On its hand, our building subsidiary [indiscernible] is in conservation works, in roads, airports and roads and streets which are also essential services during the state of alarm. The second measure that we have taken due to the pandemic refers to internal actions in AICL. And now I'd like to detail the ones we implemented in different scopes. Regarding health care, the measures recommended by the health authorities, including the reinforcement in the provision of equipment of [indiscernible] protection, the so-called personal protective equipment, PPEs, for employees and they believe in work flexibilization and remote working to continue with our activity. Helping also to achieve work-life balance measures in the workspace, in the workplace, here we include after the women's reach with the legal representatives of the workers in Spain, the application of a temporary redundancy plan with a maximum duration of 3 months until the following July 15. Mainly for the activity of construction [indiscernible] that could actually affect more than 1,300 workers. Likewise, during the period of application of the temporary redundancy plan, we have agreed the voluntary reduction or the salary of the top management in 50% and 30% for the rest of the executives and managers and by 20% for members of the board of directors of the company. With regards to the official measures taken, so we have reinforced liquidity in the company by signing a syndicated loan on April 30, 2020, amounting EUR 140 million. This syndicated loan has been signed with financial entities of reference of the company, and it's funding is supported by the state according to Royal Decree 82020 of March 17, which has got maturity on the 30th of October of 2021. This credit is guaranteed by OHL [indiscernible] and other subsidiaries of the OHL Group. Before starting into the results of 2019, a year that we call the transition year, I'd like to start by highlighting the facts of 2019 and making a short summary of what OHL is today. OHL is a company with 100 years of history with, as the president said, 18,782 employees. We're a group mainly based on construction, industrial and services with a clear strategy to be a global infrastructure provider in order to put it to value all our experiences when promoting infrastructures and real estate developments. We are strategically positioned in 3 geographical areas, which are the following: Europe, United States and Latin America. We are ranked 49th amongst the biggest international construction companies according the Engineering News Record ranker, the ENR. Our American subsidiary, Judlau, has been acknowledged by this publication as the contractor of the year in New York. And we have a strong commitment towards our ethics code. Ladies and gentlemen, dear shareholders, once I've explained the current position of OHL, let me focus on the year 2019, a year in which the company has generated a positive EBITDA in all its divisions, construction, industrial, services, confirming thus the recovery of the company. We have reduced structural expenses, and this reduction gives us a total structure cost figure in 2019 of EUR 145.2 million. This is a substantial improvement of this figure -- if we compare it to 240 million in 2017. All this is the consequence of the following: we have been transparent and predictable, and we have met all the objectives we have set for the year. We have committed towards a strict budgetary discipline. We have given priority to the cash criteria in our management. Sorry, we have no sound. [Technical Difficulty] So let me continue here. So we have maintained the risk profile when hiring by attending geographical criteria depending on the type and size of contracts. We have carried out an active management of the contracts we have in our portfolio, as reflected in the transactional agreement with Aleatica in the Atizapan Atlacomulco contract in Mexico. [Technical Difficulty] So with this agreement, we solved the differences in this contract, and we've terminated the average ages that were started in the different cross claims. And we have reached an agreement with Grupo Villar Mir and Pacadar. All this has allowed us to set the basis to normalize the company. With regards to the results of 2019, as far as objective set for this year, I can tell you, ladies and gentlemen, dear shareholders, that the company has met the goals that were set. And we can say that OHL today is more predictable than what it has been in the recent past. So with regards to the P&L account, our sales in 2019 have reached EUR 2.960 billion in the upper frame of the range between EUR 2.5 billion and EUR 3 billion. Our EBITDA has reached EUR 64.8 million in 2019 which is 44% more than what we expected which was EUR 45 million. With regards to the portfolio, with this environment of difficulty to increase our bonding lines, we have maintained our portfolio level and we have closed the year with 5,000 -- EUR 5.458 billion even after terminating in the first quarter 2019 the contract with Aleatica amounting EUR 500 million. With regards to the balance sheet, our objective of net debt with recourse, the recourse net debt for 2019 was located between minus EUR 150 million and minus EUR 200 million, and we have finished the year in minus EUR 106.5 million. The estimated rank was using these getting paid Mayakoba, EUR 91 million, we still have to get 23 million. And getting paid the debt of the Grupo Pacar amounting around EUR 122 million. On this last aspect, I must say that as we inform to the National Stock Exchange Commission on June 17 last year, these was expanded until September 30, 2020. If the maturity of these debts with Grupo [indiscernible] and this has improved the collaterals structure. With regards to the structure costs, they represent EUR 4.8 million, less to what we have forecasted, EUR 150 million. We confirm that the measures for savings set as objective at the beginning of the year have been efficient. As first, our main magnitudes for 2019, let me highlight the following. Sales have been in line with the ones of 2018 with a slight increase. And they total EUR 2.96 billion this is an increase versus 2019 of 1.8%. EBITDA has changed significantly in strength from losses, 495 million we had in 2018 to EUR 64.8 million positive in 2019. The operating result, the EBIT has closed the year 2019, with losses amounting EUR 12.3 million. Versus the greater losses we had in 2019 that totaled EUR 561 million. The total portfolio of the company has decreased by 10.4%, EUR 5.458 billion mainly due to the impact of the termination of the contracts with Aleatica which as I have explained represent EUR 5 million. In a little favorable environment, the divisions of the company have have had this following portfolio levels: Construction, we have closed 2019 with a portfolio of EUR 4.385 billion. This is an activity coverage of 21.5 months of sales. The industrial division has closed 2019 with a portfolio of command of orders of EUR 249 million that represent 13.7 months of sales. Services have reached EUR 365 million in portfolio in 2019 representing a coverage of 15.9 months of activity. So despite these clear operating improvement in the company and the generation of positive operating profit, the net result is still negative of EUR 143 million mainly due to the deterioration we have applied to the participation in the Old War Office project, EUR 71 million less and other deteriorations in other areas, consequence of the exchange rates mainly. Dear shareholders, let us focus the result of the different divisions of OHL during 2019. And I'd like to tell you that the figures that I'm going to give you right now prove growth and operational strength in all the divisions. Construction division, we have reached sales of EUR 2.452 billion, EBITDA of EUR 75.5 million which is 3.1% of sales. And that represents 83.2% of the total of the company -- the total EBITDA of the company. In industrial section, sales of EUR 218.2 million and a growth close to 15% has generated an EBITDA of EUR 9.8 million which is 4.5% of the sales. And that represents 7.4% of the total of the company. The Services division has had sales of EUR 275.6 million with a growth higher to 4%, generating an EBITDA of EUR 12.4 million. That is 4.5% of sales. And that represents 9.4% of the total of the company. So all the divisions have had a significant -- positive evolution of the EBITDA margin if we compare it to the figures of the previous year. Construction has gone from 329.6 million negative in 2018 to EUR 75.5 million positive in 2019. The industrial division has gone from minus 63 million, 63 million negative in 2018 to 9.8 million positive in 2019. And services has gone from 1.3 million positive in 2018 to 12.4 million positive in 2019. So these figures clearly show that we're back in track of operational profitability in OHL in all our divisions with EBITDA over sales percentages that are in line with our objectives. With regards to sales, EBITDA and portfolio in our 3 geographical areas: Europe, North America and Latin America. In 2019 reflect data of consistency in our strategy to reduce the risk profile of the company. And working in the geographical areas where OHL has created technical capacity and better knowledge of the market. Thus, if we take into account the geographical areas, Europe has had sales of EUR 1.366 billion representing 46% of the total sales of the company and has closed the year with contracts representing 43% of the total of the portfolio, and that represents EUR 2.370 billion and EBITDA of EUR 33 million. That was in Europe. North America. Sales representing EUR 1 billion, representing 34% of the total sales of the company. Rising EBITDA, totaling an EBITDA of EUR 31 million with the final portfolio in 2019 which as percentages it represents 34% and it reaches EUR 1.847 billion. Latin America has total sales of EUR 545 million. That is 18% of the total and it has contributed to EBITDA with EUR 34 million. And its portfolio represents 22% of the total of the company totaling EUR 1.188 billion. We take into account the 2019 sales portfolio represents 20.3 months of activity and it's concentrated at 99% in the 3 regions we have mentioned. Which as you know they are the strategic regions for the company. Let me show you now the contracts OHL has had in 2019 and the total portfolio of the company. The total portfolio of OHL at the year-end 2019 represented EUR 5.458 billion. Total contracts is EUR 2.668 billion, and construction generates 79.4% of all these contracts. And in the slide that you can see -- you can -- you have the main contracts that have been awarded in 2019. And the projects with greater weight in our portfolio. If we go to the liquidity with resource evolution, OHL has finished 2019 with a recourse liquidity of EUR 782 million and that has represented a reduction of EUR 251 million versus the EUR 1.033 billion we had last year. We started the year. So the projects with deficits and we have the legacy -- we had the legacy projects have represented a cash exit of 146 million versus 161 we had budgeted. Turn to the other side, the business as usual activity has generated cash amounted EUR 158 million. With regards to the total cost of the structure we have, they have said, as I said before, EUR 145 million in 2019 reducing by 100 million if we compare to EUR 240 million we had in 2017. Let me now explain the facts after the closure of 2019 and give you the highlights. Amortization of the bond maturing at March 2020. In relation to the issuance of corporate bonds carried out in March 2012 that had their maturity in March 2020, the company has already paid EUR 73.3 million of the main capital plus the corresponding interest. This amortization has allowed for the company to reduce its leveraging. OHL has a live total of 593 million in corporate bonds corresponding to the issuances carried out between 2014 and 2015 with maturities will take place in 2022 and 2023. OHL has also signed a syndicated loan totaling EUR 140 million as I have already explained at the beginning of this intervention. And finally, we have had the entry in the shareholder structure of the company of the Amodio family. As detailed by the President of the Board. In the capital of OHL, we have a new reference shareholder, the family Amodio to which we do give a warm welcome. And dear shareholders, in order for OHL to be once again a competitive company, we have adjust its structural costs. We have produced its debt we have managed to increase its liquidity by signing a syndicated loan. All these major work has led to the arrival of a new shareholder that has acknowledged the value that the company has to grow and to generate results. And this family -- this new shareholder is committed with the future of OHL. Once we have presented the main magnitude with regards to the P&L account and the balance sheet and the cash flow of the company during... [Technical Difficulty] We can continue. So Slide 17 wants to explain the strategic pillars, we are based the management of our company on. Let me read once again. So once we have presented the main magnitudes with regards to the P&L account, the balance sheet and the cash flow of the company during 2019, let me now give you more detailed information on the strategic pillars that we're going to follow for our growth, our action lines for 2020 and our future objectives on a midterm. So let me now inform about the strategic pillars that we're going to focus for our future growth. First of all, I must make a reference to corporate governance. OHL has a corporate governance which is solid and independent. It's Board of administrations is mainly made up of proprietary -- nonproprietary board members. And the composition of the Board has anticipated to that recommendation of having 30% of women. And since 2018 we do meet this code of good governance for 2020. So depending from these Board of Directors, through the Audit and Compliance committee, we have the actions carried out in compliance, internal audit and risk control activities that foster the good governance criteria inside out of our organization. Likewise, the appointments and remunerations commission [indiscernible] for transparency and its independence and it works on a constant basis to align the objectives of the shareholders and of the employees. Secondly, we will focus on cash. We want to generate cash. The company has established as its main priority when taking decisions to give priority to a cash strict control, a culture upon which we have been going deeper during 2019 and a culture we will continue to grow during 2020. We will continue positive -- we will require and demand positive cash flow in all those projects, trying to monetize those non-strategic assets. We want to continue to restrain and control costs. OHL has worked hard to reduce cost -- structure costs in 2019. Despite the effort we have done, we're going to continue with our adjustments policy because we understand that we have already done the major effort, but we still have a last revision to do. Fourthly, we will work in the portfolio, management and risk control. Of course, we are committed towards a sustainable management of our portfolio, and we want to reinforce risk control in offers with an approach assessing geographical and economic risks, but also technical, legal risks a risk of resources availability. We want to implement the manage -- the culture of contract management versus the culture of project management. So from the stance of profitability, the objective in hiring and contract will be to improve constantly our margins. And fifthly, we will continue to foster our concessions business. Our subsidiary of concessions, Senda Infraestructuras, is ready to enter into new assets to get new assets in its portfolio. So OHL wants to be a promoter for our concessions and developments that will generate contracts in the construction sector with better margins than the average, minimizing capital contributions and with a future policy of assets rotation. So once we have tackled the strategic pillars, let me now give you the lines to -- for the company will be following for 2020. An increase of contracts, optimizing and improving the operational margins, fine-tuning structural cost and fostering the new portfolio of concessions. We will continue to focus on cash control. We will carry out an active management of our real estate asset -- projects that are Canalejas and Old War Office. And we will reduce leverage. And finally, in order to face our future and to reach our objectives on a midterm, we will use the following tools: Efficient structure guided towards business, solid presence in the geographical areas where we have decided to be, proven track record and know-how of the company, active management and risk control independence in management and management team fully in line with the strategic plan. All this will be reflected in our midterm future objectives. And we will try -- we will follow and try to get sales more than EUR 4 billion, margin of EBITDA in businesses of more than 4%, lower leveraging and fostering the business of concessions. Dear shareholders, before finishing my intervention and giving the floor back to the president, I'd like to make a final comment. Thanks to the work carried out together by the OHL team, we can say today that it is a company that firmly works towards profitability and sustainability. So in this moment of uncertainty, we are working to contribute with our activity in favor of society and to mitigate in our business plan the impact of the pandemic in the magnitudes of the company at the short, mid and long run. The year 2019, in which the shares of the company have [indiscernible] the company by 60%, these have set the pillars for the future growth of this centennial company. OHL has got a solid experience in Europe and America to continents in which we will continue to work, host programs and budgets for investment in infrastructures make us envisage a very promising future for OHL, a company that undoubtedly has been able, thanks to his experience in infrastructures to live its footprint in matter of growth and progress in all the countries where it's present. These achievements in the past and the objectives for the future are and will be the consequence of the effort of the management team and of the almost 19,000 people that are in the team of OHL. And I want to thank them all for their firm commitment, and I want to thank the trust of the dear shareholders, the investors, our clients, providers and specially our banks of reference, the end insurance entities, bondholders and all those ones that support us to allow us to fulfill our business plan. We altogether, will continue to work to face the future challenges that OHL faces right now within maximum guarantees. Thank you very much, dear shareholders. And now I will give the floor to the President.

Thank you very much. Dear board member. So I take back my speech, first of all, to apologize for the 2 or 3 short interruptions we've had. Our aim was to be sure technically speaking, that everything we're doing and saying here is being received by you. We think that is [indiscernible] speaking. So we keep the normal development of these SGM. So next, I'd like to speak about 3 main topics. Our positioning regarding good governance, stating in addition, the advancement of the 3 organizational units subject to the policies established by the Board of Directors, compliance directorate, risks, directorate and general teratoid and to also briefly approach the situation of the company regarding sustainability. As I had already mentioned at the beginning of my speech. And the CEO also mentioned that, OHL has currently a solid and independent corporate governance which represents some essential pillar to promote growth and wealth generation in this company. On its hand, the 3 organizational units that I was referring to before, reporting to the Board of Directors, compliance directorate, risk directorate and internal directorate have carried out important advancements throughout the year that I will detail and share with you next. Regarding the compliance directorate, OHL organizes his commitment according to the good business practices through our ethical code implemented since 2010 which is a result of the former conduct code that we implemented in about 22 -- 2002, that is, from our anticorruption policy and our crime prevention policy. All that translates into a rigorous compliance very detailed that goes well beyond the requirements of the criminal and regulatory legislation that may be applicable regarding anti-corruption. Focused in 2019, we need to highlight that OHL has stated at the beginning of my speech has renewed the system for crime provation and obtain the international certifications, ISO 37001, for system of anti-corruption management and UNE 19601 for the criminal compliance management system. Regarding the anti corruption policy approved by the Board of Directors in June 2015 reviewed in July 2019 reflecting position of zero tolerance before any form of bribery or corruption in the public sector and the private sector. Throughout 2019, OHL, as I mentioned in the beginning of my speech, updated is crime prevention model from 2016 to adopt it to the organizational changes that have taken place within the OHL Group. This has rendered as a result a system for crime prevention that is quite robust, allowing us to mitigate the criminal risks to which we're exposed to in agreement with the singularities of our structure on our business. Likewise, in November 2019, the Board of Directors of the company approved the crime prevention policy handbook, replacing the regulation of the crime prevention model from 2016. All that is framed within our belief and commitment to operate in a responsible action environment regarding social, environmental and governance terms, allowing us to get to know and respond to changes, needs and expectations of our stakeholders. Regarding the risks of the electorate, OHL's activity is exposed to different types of risks and face them. We have chosen years ago to have a effective risk management system. Therefore, we have integrated the system within our business processes with constant monitoring throughout the life of the project. And we have reinforcing in its identification and assessment in the tendering offer in the tendering phase. And thirdly, ladies and gentlemen, dear shareholders, I'll briefly refer to the internal audit directorate because mission is to have the organization to meet its targets. And to give a systematic and disciplined approach, processing improve its processes for managing risks, control and corporate governance. Likewise, we also need to highlight our work regarding sustainability. As a company, these Board of Directors as well understands the importance of operating in a responsible action framework regarding social, environmental and governance terms, allowing us to get to know and meet the changes, needs and expectations of our shareholders and society at large. OHL has integrated cost, actually sustainability in our management, and we turn it into a competitiveness factor strengthening the development of a responsible business model. In this regard, we're fully aware of the responsibility we have as a company versus changes as important as climate change, the appropriate resource management, reduction of inequalities, diversity and employment creation amongst other challenges. Therefore, we work to generate growth wherever we operate. Mainly within the framework of our works and projects while we materialize our commitment with the Aderians to the main international initiatives. Such as the 10 principles of the global compact from the UN, the work towards the compliance of the sustainable development goals. All presence in the stock trade index FTSE 4 Good, amongst others because we have reinforced our commitment in sustainability and we bring to initiatives such as a new deal for Europe, or the CEO alliance for the diversity. I'd like to highlight the shareholders that in 2019, we have fostered our work towards human rights protection. We have kept believing in health and safety as a key element, and we have favored employability and inclusion of vulnerable groups without forgetting, at any point, environmental protection in a permanent manner. Next, as we usually do, and as we have usually done in our [indiscernible], I'd like to show some images of the works and options are more relevant for the company. OHL has completed the main phase for the refurbishment, of the Canarsie tunnel ahead of schedule actually. That is the main way to connect, Brooklyn and Manhattan in services line with an average of 400,000 passengers per day. The next slide refers to the new hospital in Curico. Showing a completion close to 75%. Our project is built in Chile. We'll have more than 109,000 square meters of surface distributed in 9 floors with about 400 beds. This new health center that are embedded a young systemic system is a structure will place the hospital that was destroyed by the earthquake that hit the country in 2010. The next slide refers to the first award to our concession subsidiary,Senda Infraestructuras where the OHL group will build and manage in consortium 465 social homes in Ireland, amounting to more than EUR 130 million. You'll include the latest technologies such as BIM, the building information modeling methodology, and it will be carried out according to the NZEB sustainable criterium that stands for nearly zero energy buildings. Next, we have the Lagarde water treatment plant in Spain, the largest water treatment plant in Spain with -- for biological treatment with biofiltration to [indiscernible] and one of the largest in Europe. The project has been acknowledged as the best work of engineering by the [indiscernible] Awards given by the Galicia Association of Public Work Engineers. Next slide, we can see that OHL has been awarded several renewable energy projects amounting to nearly 300 megawatts in Chile, Mexico and Spain, amongst them we have the PV plants of Lavadia in Chile, West Calientes in Mexico and Safran in Spain. Finally, the next slide refers to the awarding of OHL [indiscernible] division of engineering, construction and commissioning project for the conversion and extension of the copper sulfide processing plant in the Mantos Blancos concentration plant in Antofagasta, Chile. So these shareholders, the presentation and accountability that we have given before this General Shareholders' Meeting. The first one, as I said in the beginning of my speech, that has been done fully remotely. Reflects effective management carried out in a company. They are sort of already predictable and stable. And that in our modest opinion has been useful to give its solidity and set his future path. A future path that will define these immediate present and future of OHL, as I was referring to before. At present time characterized by the pillars of the stability and growth of the business and trust in the financial sector to keep progressing, a future set no doubt by new stage that the company is taking with great hope and excitement. And also keeping present that our target is to keep contributing to the progress of society through development and collaboration of great projects and infrastructures. We have been working with that aim within the last 30 years, and we aim to keep doing so. I'd like to ensure the shareholders that the members of the Board of Directors, the members of the management team, and all of the OHL employees are fully committed with the future. And even though after setting the pillars of making OHL a sustainable company, we will keep working relentlessly in all areas to keep us strengthening the company so that it may walk and never leave the path of profitability. A profitability path of a historical company with more than 109 years of history. That's the base of our present and our future times. OHL has left a mark for sure in Spain and the world and our aim is to keep doing so. Reflected on large infrastructure projects, as I was mentioned before, in the 5 continents. And we will keep doing so, thanks to the effort and commitment of our shareholders, our employees our management team and all the stakeholders that have been part of the great transformation project that OHL has experienced in the last few years. A transformation project that has not yet finished. We keep working on it, and for which we hope to have the support of all of you, dear shareholders. That is the commitment. Now we hereby acquire we view just like in previous years. After my speech and the Deputy Vice President and CEO of the company, next, as usual, in all GSMs, I give the floor to the Secretary of the Board. So that we can explain the given proposal made by the Board of Directors, whose lease rule and full text has been given previously to a Notary Public presenting and justifying each of these agreements. Ms. Secretary, you have the floor.

Thank you, the President. So before justifying the agreements, I'd like to correct an error in the constitution formality. Because when we mentioned the members of the Board who are present I forgot a name. So just on the record, we have all members of the Board of Directors present. Remotely we have Silvia Villamir; [indiscernible]; Jose Calderon; Carmen Andres; [indiscernible] Juan Antonia Santamera. And physically, here face to face, we have the CEO and the President. So we hereby correct that error we made at the beginning. Okay. So next, we proceed to justifying the agreements. So here, we propose a total of 11 agreements whose full text have being made available to the shareholders the documents of these GSM. We have 3 types of agreements: ordinary, [indiscernible] 1 to 6 and 9 [indiscernible] agreements, 7, 8, 10 and 11. Together with the last [indiscernible], the 12, which is just a procedural agreement regarding the delegation of powers of [indiscernible] to raise the agreements of the GSM that need to be registered and carry them out. The first 4 agreements of the agenda are referring to the approval of the accounts, the management report, the approval of the proposal of application of the result, the approval of the statement of nonfinancial information that is part of the consolidated management report and the approval of the management of the board of directors during the year. Regarding our accounts, the management part and the management of the directors. Corresponding to year 2019, the Board can only be available for all of you for any information or clarification complementary that you -- that you may have. The other role in [indiscernible] refer to the fifth to the reelection of the [indiscernible] of the company for 2020. Six, appointment of the company [indiscernible] directors for the year 2021, 2022, 2023 and ninth for the consultative voting of the annual report on the remuneration to the Board members. The firm, the loyal to sell has been auditing our accounts for more than 18 years, very seriously and rigorously. One more year, we have suggested to the shareholders by the board to follow the recommendation of the other committee made to the Board of Directors to Reelect Deloitte as the auditor of the company and his group for the year 2020. Being these last year to be audited by the auditing firm according to the [indiscernible] regulation. In this context and after the compliance and Audit committee has started out a selection process to designate and newer content for the company to place Deloitte we suggest in the sixth point of the agenda for the recommendation of the actual Audit Committee, the firm of Ernst & Young SA or EY it's on in the market. As the [indiscernible] consolidated group corresponding to the years 2021, 2022 and 2023. According to the current legislation, established in [indiscernible] was appointed for an initial period of 3 years for companies whose account [indiscernible] is compulsory and that is the case here. The last agreement is about submitting to consultant voting of the General Shareholders' Meeting the annual report of remunerations to the Board corresponding to year 2018 that was approved by the Board of Directors and is meeting held last May 5. Finally, these are all agreements that are ordinary and the Board of Directors just makes itself available for the shareholders through complementary information that may be convenient or appropriate by the shareholders. After these explanations on the ordinary agreements, I'll refer next to the extraordinary agreements corresponding to Item Seven, eighth and 10th in our agenda. Seventh item, to approve the proposal reelection as a Director of Silvia [indiscernible] Fuentes for this for [indiscernible] , after the formal term for which you will appoint till has expired. This partner was suggested by the group of [indiscernible], a company longest in presentation of his share interest. And therefore, due to the legal effects, so facts, regulations and principles of good governance, she'll have a consideration of proprietary independent rapture representing the Grupo Villar Mir. For the voting of this bond, we have given the shareholders, the entity, CV and category of the candidate, so they may vote with all the necessary information. Item 8 refers to [indiscernible] made by the Board of Directors before after a favorable report by the committee of [indiscernible] and remuneration for resizing the Board of directors. This proposal was made after resignation of the Director of Ms. [indiscernible] since the Board and that he was an appropriate measure to adjust the expense of company stock expenses. However, there have been some recent changes in the shareholding of the company that have given rise to 2 reference shareholders with similar share packages. And therefore, following the principle of equal treatment and the relation of corporate governance applicable, we should reduce the size of the Board, keeping a Board of [indiscernible] members. The Board has informed the shareholders of [indiscernible] opinion not to reduce its size, so that we expect that this agreement will not be approved. Item 10 suggests no tax for the remuneration policy of the board current for the years 2020, 2021 or 2022 that will replace in full the current tax approved in 2018 that has been reviewed and updated according to the remuneration system stating the bylaws [indiscernible] into the current situation and circumstances of the company without modifying, in many case, amount or remuneration elements or the main principles, including the formal policy, It has been available, it has been made available to the shareholders since the meeting was called. And [indiscernible] refers allocation in favor of the board for the fast future of increase in the capital in 1 [indiscernible] times until the maximum legally allowed at least 50% of the current capital or 85.9 million additional euros. Through the issuance of new shares in a maximum period of 5 years, term and limit -- terms and limits are the maximum, say, by the capital corporations law. This includes the cycle to exclude part or fully right to subscribe to [indiscernible] subscription of any issuance and the Board of Directors considered appropriate in line with accommodations of group governance, we mid- to a maximum percent of the social capital. The Board of Directors and publication of the call of this GSM, also announced sort of information publishing the CNMV agreed in accordance of volatility of certain market and the uncertainties in rating the investors. That in case of improving this agreement, you will limit the use of litigation requested to the general shareholders meeting to carry out capital increases with or without an exclusion of the right of preferential subscription at a maximum of 20% of the social capital the corporation currently has is in fact [indiscernible] proceed your to Source funds said the terms and conditions of the capital increases as well as determining the investment -- the investors and markets were to target those increases so that we can be a lot of points in the right condition, develop of opportunities in the competitive environment where the company works, it might be necessary and useful for the corporate intents. And last item 12 refers to litigating faculties for development, authorization and reiterating of all the former agreements. Mr. President?

Thank you. Well, we mentioned at the beginning of our session, the [indiscernible] there was no any question or come and registered. That is the right for any shareholder as studied by law and the shareholders. Do we have the right to take the floor, to speak up if they wish. In agreement with the procedure approved and published in agreement with the regulation of the GSM well, Contour, technique is not possible to receive any questions or comments hereafter. Okay. So let's say that on the record in Notary Public. We have comply with all the procedures to give the flow to any shareholder. No 1 registered to do so. And therefore, no one wishes to speak up. And according to the procedure published, right now, the time allotted to vote will actually finishes. So Ms. Secretary, please proceed. Okay. So we proceed to reading the agreements and the result of the voting. As stated in the list issued by the administrative services of the company. Please go ahead, Ms. Secretary.

So first agreement to approve the new accounts integrated by the balance sheet, in account instead of changes seen of changes in the net worth cash flow statement in the report as well as the margin report corresponding to the year closed on December 31, 2019, both for the company and its consolidated group. This proposal has a favorable report a 93 million votes in favor. That is 99.9% in favor. Okay. So it is therefore approved. Second item, second agreement to approve the nonfinancial information statement consolidated, corresponding to year 2019 that is part of the management report of [indiscernible] Group as [indiscernible]. This proposal has a federal report by the committee of [indiscernible] remunerations. We have 93 million votes in favor representing 99.9% of the quorum. It is therefore approved. So Item 3, Agreement 3, that is to approve the proposal of applying the results of the company, corresponding to the year 2019, showing losses amounting to EUR 59.8 million and include them in the negative results of former years. The votes in favor are, again, EUR 93.8 million, representing 99.91% of the quorum.

Okay. So we therefore prove this sector. For the agreement, to approve the management made by the Board of Directors of the company in the year 2019. We have 93.34 million votes in favor. That is 99.953% of the quorum. Okay. It is for approved fifth agreement, the secondary to reelect Deloitte, as the current auditors of [indiscernible] saying is consolidated [indiscernible] for no period of the year. Between January 1 and December 1, 2020. In agreement with Article 264 of the Corporate Corporation's level. This proposal has a report of the Audit and compliance committee. 92.2 million votes in favor. That is 99.9% votes in favor. So 6 agreement, the former fifth is approved. Sixth. To appoint, as a counter out of the company in this consolidating group for the year 2021, '22, '23. The company Ernst & Young headquartered in Madrid, 28 3, Cardinal [indiscernible] with tax registration number B78970506 and [indiscernible] Mercantile Registry in book 39351, Page 29, Section 8, Page 23 123 registration 325 in the official registry of with [indiscernible] this proposal of the [indiscernible] report by the Audit and Compliance committee and it has 93.3 million in favor. That is 99.9% of the quorum. Votes in favor. Therefore, it is approved. And now we go to the next seven. 7 an agreement to elect Mrs. Silia Bami Fuentes as the Board members of the company, here [indiscernible] appointment it will be carried out by 4 years since this agreement