Ferrovial S A : Conference call transcript

Madrid, February 25th, 2021 - 18:00 - Edited Transcript of the FY 2020 Earnings Conference Call

CORPORATE PARTICIPANTSBegoña Morenes

Rafael del Pino y Calvo-Sotelo Ignacio Madridejos Fernández Ernesto López Mozo

• - Ferrovial S.A. - Head of Investor Relations

• - Ferrovial, S.A. - Chairman of the Board

• - Ferrovial, S.A. - CEO

• - Ferrovial S.A. - CFO

PRESENTATION TRANSCRIPT

Begoña Morenes, Ferrovial S.A. - Head of Investor Relations

Good afternoon, everybody, and welcome to Ferrovial's conference call to discuss the financial results for the full year 2020. Just as a reminder, both the results report and presentation are available to you on our website. A couple of highlights from today's results - financial information included in our report has been impacted by COVID-19 outbreak mainly since the second half of March.

Given the uncertainty regarding the speed and extent of resumption in activity, it is not possible to predict how health crisis will affect Ferrovial's performance in 2021.

Ferrovial will continue to closely monitor trading conditions and further evidence on wider economic impacts.

I am joined here today by Mr. Rafael del Pino, Ferrovial's Chairman; Mr. Ignacio Madridejos, Ferrovial's CEO; and Mr. Ernesto López Mozo, our CFO.

If you have any questions, you may ask them through the forum included in the webcast.

During the Q&A session at the end of this call, we will be reading out your questions and who they are from. With this, I will hand over to Mr. del Pino. Rafael, the floor is yours.

Rafael del Pino y Calvo-Sotelo, Ferrovial, S.A. - Chairman of the Board

Thank you, Begoña.

2020 has been a difficult year with an unprecedented health crisis that has impacted all aspects of our lives.

COVID-19 forced governments to impose mobility restrictions, travel bans and quarantines across the globe, which in turn led the economies closing down. In this scenario, we have seen our operations impacted, especially in terms of traffic levels in Toll Roads and Airports, although whenever restrictions were lifted, we saw a quick recovery in performance, especially in our toll roads in North America. We have taken measures to mitigate the COVID-19 impact through reduction in costs and CapEx plans at corporate and also at asset level.

Although also impacted by COVID-19, our contracting business showed resilient performance. Production levels in Construction were strong, and EBIT margin reached 2.3%, which is much better than what we were initially expecting for the year.

We were also able to generate a strong activity cash flow in the year, especially helped by improved working capital on the back of better collection terms at Construction and Services, the strong performance of Budimex and divestments that were completed.

Ferrovial faced COVID-19 with a record high level of liquidity and a strong cash position. Throughout the year, we have strived to preserve and improve even further the liquidity position of the company, issuing corporate bonds, drawing syndicated credit facilities issued through ECB pandemic emergency purchase programme. We closed 2020 with EUR 8 billion of available liquidity ex-infrastructure, and EUR 1.3 billion in available liquidity lines. Net cash position ex-infra at close to EUR 2 billion, including discontinued activities.

We are following our strategy, which is aligned with the Horizon 24 plan presented a year ago. We are refocusing on the development and operation of sustainable infrastructure with high concessional value, rotation of mature assets and increasing our exposure to Managed Lanes. Examples of these are the sale of Broadspectrum at AUD 485 million included in divestment of Services, to which Ferrovial is still committed; the sale of our Portuguese assets Norte Litoral and Algarve for EUR 171 million, cash inflow part in 2020, and part will happen in 2021; the acquisition of an additional 15% in the I-77 Managed Lane; and the sale of 5% of Budimex for EUR 58 million, while still maintaining a controlling 50.1% stake.

Sustainability is also a core part of our strategy and fully aligned with our business strategy. Although we will explain it in further detail later on, some of the highlights are: we have ambitious decarbonisation plans until 2030 and plan to reach carbon neutrality by 2050 through several milestones, including reaching 100% of renewable electricity sourcing by 2025. We are a pioneer in reaching third-party verification on the alignment of Ferrovial's value chain with United

Nations' Sustainable Development Goals, and our effort in sustainability has gained us recognition by the main sustainability indices.

We review in the following slides some of the main figures for the year.

Revenues grew by 9.9% like-for-like to over EUR 6 billion on the back of higher Construction revenues partially offset by lower contribution from toll roads. Dividends from projects reached EUR 458 million, a bit lower than the EUR 729 million that happened in 2019. Our operating cash flow reached over EUR 800 million, and divestments in the year, some of which I mentioned in the previous slide, totaled EUR 501 million in inflows, with some transactions still pending full closure in 2021. And the net cash position ex-infrastructure assets reached close to EUR 2 billion, while liquidity levels were at close to EUR 8 billion.

In the current situation, short-term visibility remains limited, and it is difficult to provide any guidance on the results of the coming quarters. This being said, we remain confident when we look ahead. Our assets have long duration, are located in diversified growth areas, have flexibility to adapt to changes in behaviour patterns that may come and should play a key role in relieving capacity constraints in their regions.

Our strategy is clear: focusing on developing efficient, innovative and sustainable infrastructure that will create value for all our stakeholders. We see clear opportunities ahead not only building on our competitive advantage but also with enough financial strength to reap attractive growth opportunities that we believe will come.

So now Ignacio, please, you have the floor.

Ignacio Madridejos Fernández, Ferrovial, S.A. - CEO

Thank you, Rafael. And hello, everyone.

A pleasure to present the 2020 financial results, a difficult year because of the pandemic, but we delivered on the things that we can control.

Let me start again reminding you of our strategy. As you know, we develop and operate innovative, efficient and sustainable infrastructure, while creating value for stakeholders. Our focus is on developing Managed Lanes in the U.S. We also develop and operate other high-quality toll roads and airports that contribute to our corporate portfolio.

Our Construction Division is not only a cash contributor but a key part of our strategy, as it helps us to develop complex infra projects. We have a target of 30% revenues coming from internal projects. These construction capabilities will also help us to develop concessional projects on electrification, water and mobility.

Our geographical focus is on the U.S., but we also consider core geographies, other markets like Canada, Poland, Spain, U.K., Chile, Colombia or Peru. We have a strong pipeline of projects, mainly U.S. Managed Lanes but also other toll roads and yellow-field airports and even in water or electrification. Some of these projects may not become a reality, and others we may lose to competitors because we will maintain our financial discipline to get double-digit returns, but we will continue working to develop our portfolio with some of the best infra-assets in the industry.

At Ferrovial, we look at the main global challenges and turn them into business opportunities, no doubt we can contribute to create a better world. We have a sustainability strategy, which is fully aligned with our business strategy and in which we have been working for years.

We are the first company to certify the impact of our strategy on the United Nations Sustainable Development Goals and define metrics to measure our progress. We have a plan to become carbon neutral by 2050, with intermediate milestones to source 100% from renewable energy by 2025 and 32% reduction of scope 1 and 2 emissions by 2030 compared to 2009. I'm sure we will deliver in a similar way well ahead of our 2020 targets.

In the case of water, we also have plans to reduce 20% of our water consumption by 2030 compared to base year 2017 and to compensate annually 30x our consumption with treatment and access. Our sustainability efforts through the years have helped us to be part of the Dow Jones Sustainability Index for 19 years and other highly recognized indexes.

COVID-19 has impacted our P&L mainly with lower traffic both in our Toll roads and our Airports, in the latter also with exceptional costs and fixed asset impairments.

In our Construction unit, our projects were affected by stoppages, loss of productivity and other effects of mobility restrictions, with an estimated negative impact to our EBIT of EUR 49 million. In the case of our Services unit, it was affected in a similar way with a EUR 102 million negative impact at EBITDA level. It has also impacted our cash flow

with lower dividends from infra-assets distribution of EUR 458 million, including Services projects dividends, compared to EUR 729 million in 2019.

Of course, we took measures to mitigate all these negative effects. We achiev ed our committed EUR 26 million corporate cost reduction for the year 2020 and, on top of it implemented additional EUR 23 million of OpEx savings related to COVID. In all divisions, we implemented OpEx and CapEx savings, most relevant in Airports with GBP 303 million OpEx reduction and GBP 700 million CapEx reduction at Heathrow and, in a similar way, GBP 37 million and GBP 25 million at AGS.

All priorities during the pandemic have been to protect the health of our employees and clients, to reinforce our financial position and support the community. I want to thank all employees for their contribution during this pandemic. I am very proud of all of them.

Now moving to our toll road business. As commented, traffic heavily impacted by COVID-19, but we experienced a solid recovery when mobility restrictions were lifted. Our EBITDA was EUR 251 million, 92% in the U.S. And we received EUR 340 million dividends from toll roads, EUR 109 million coming from LBJ that distributed its first dividend. During the year, we reclassified Autema to an intangible asset with traffic risk, restating 2020 results.

We divested a part of Norte Litoral and Algarve, collecting EUR 100 million and pending authorities' approval for the 20% remaining value at EUR 70 million, and also, we bought an additional 15% in I-77 to reach 65.1% with an investment of EUR 68 million. We are progressing well on our new toll roads, especially our new Managed Lanes. Our 6.7 miles extension of the NTE 35 West is progressing according to schedule being 20% complete and expected to be opened in 2023. The I-66 is progressing well. It's 57% complete and expected to open at the beginning of 2023. In the case of other toll roads, Ruta del Cacao is 68% complete, Bratislava 86% and OSARs 97%, all of them partially open to traffic.

As commented, the most relevant indicator of our performance last year was the restrictions to mobility made by authorities because of the pandemic. And Toronto was one of the most restricted areas of the world, if not the most. Their reopening after the April lockdown was in phases during a long period of time, and after an increase of cases after the summer, restrictions were back very fast. Today, Toronto is under a stay-at-home order, with schools operating remotely. It is worth highlighting the lower impact on traffic that this second lockdown has had when compared to the first one last April when traffic was down by 80%. The most relevant indicator this year is going to be vaccination. And Canada started slowly, but they have bought more vaccines per capita than many other countries, so this will be in a better situation for the distribution than what we have seen in other regions such as in Europe.

The situation in Dallas-Fort Worth was different, and their way to face the pandemic much less restrictive than what we saw in Toronto. After their April lockdown, they lifted some of the restrictions to recover the economy pretty fast, leading at a strong recovery on traffic levels too. They had an increase of cases at the beginning of the summer, around mid-June, and the last quarter of the year, but they decided to maintain similar level of restrictions until the cases upswing after Thanksgiving, when restrictions again became tighter.

The pace of recovery has been different in each Managed Lane, depending on their specific features, like NTE 35 West that has ended up the year only 10% below last year traffic level, thanks to the higher exposure to commercial traffic and the fact that these assets is still ramping up.

Like in the case of Toronto, increasing restrictions at year-end was met by a smaller impact on traffic levels than what we saw in the beginning of the pandemic. Dallas-Fort Worth is progressing well with the vaccination, and we expect it will have a positive result in recovering mobility in the area in the following months.

Now entering in more detail about the 407 results. We talk enough about traffic and the severe restrictions to mobility that have influenced results last year. In terms of tariffs, we increased them in February last year and maintained for the rest of 2020. This implies that, of seasonal tariff scheme that we announced in December 2019, only the first of the changes was implemented. We have not announced a tariff increase for 2021 in December because we are in the middle of a stay-at-home order. This being said, we have the flexibility to change prices at any point during 2021 if restrictions to mobility are lifted and traffic recovers.

In terms of Schedule 22, including the conditions of the contract, a pandemic is a reason of force majeure, which should prevent Schedule 22 from being applied. In addition, the spirit of the contract is to relieve of congestion the network and especially the 401 and congestion, which is not existent today. For this reason and following the view of both internal and external counsel, we have not registered a provision for Schedule 22 payments since the pandemic. The administration decision is expected for mid-April.

407 ETR distributed CAD 562.5 million in 2020. That, at Ferrovial stake, it is EUR 160 million. The 407 Board will monitor the evolution of the pandemic and will decide about new dividends this year if we are above the 1.35x debt service coverage ratio. It is, however, not expected to see dividends from 407 at least until the second part of the year, although much will depend on the performance of the asset and traffic evolution.

The financial position of the 407 is very strong with a CAD 614 million cash position and limited debt payments in the following years.

We will now take a closer look at the different levers that should impact traffic performance on the 407 ETR in the same way we'll do for the managed lanes later on, levers which make us very optimistic about the 407 ETR future.

The most important drivers in the long term are population growth and economic activity in the area. Third-party forecasts about these factors are very positive. Greater Toronto and Hamilton Area is expected to add over 2 million people in the next 20 years, thanks to a diversified economy that will attract immigration from other areas; and is expected to grow GDP by 5% in 2021 and 4.5% in 2022. The 407 will be a facilitator of this growth, connecting business and population along the corridor, which will capture much of the population growth. In 2020, 74% of the growth in the area took place in areas which were directly serviced by the 407 ETR.

E-commerce has already had a positive impact on traffic in 2020. There has been a strong growth of delivery company strips through the year. E-commerce will be a positive contributor to the 407. There are many different estimates, but all point to relevant growth. We are seeing more and more companies locating close to the 407 to take advantage of the time savings compared to alternative routes. The 407 is good value for money for them, but e-commerce growth in traffic comes from additional impacts: more individual purchases, failed deliveries, returns and shorter delivery time frames being offered to customers. It is also changing patterns with more traffic at peaks and mid-days and less on weekends and nights. With our price flexibility, we can adapt to these changes on patterns.

I know that change in work from home has been a topic difficult to forecast. Before the pandemic, between 7% to 13% of Canadians were doing some kind of working from home. During the worst times of the pandemic in April, with a stay - at-home order, 40% of Canadians were working from home. Last employer surveys, at least from the third quarter of 2020, suggest that most businesses expect workers to be back in the office after the pandemic. Third-party estimates suggest that the percentage of people who will do some kind of work from home will be between 15% and 20% and very few full-time. In addition, it is good to remember that 85.6% of personal customers make less than 3 trips a month, and most customers do not use the 407 daily even if commuting. No doubt that there will be an impact from work from home in the short term, but we are confident that it will be soon compensated by population and economic growth.

There have been some comments about the impact of a new highway on the north of the 407, between 10 to 15 kilometres from segment C3 and C4. We have brought 2 maps that could be illustrative about this highway. The first, on the left, is from Google Maps, and it shows congestion in Toronto on a normal Wednesday at 5:20 p.m. before the pandemic. Red and orange lines are those with congestion. You can see how relevant is the 407 to solve the problem of congestion in the city and how far is the 413 from congested areas. There are no time savings using this potential new highway. The map on the right is also from Google Maps, and you can see urbanised areas in Toronto and the green belt. Even if the 413 is built in 10, 15 years times, our estimates of the impact on traffic in the 407 at that time are minimal.

Now moving to managed lanes. I commented previously how Dallas was less affected than Toronto by mobility restrictions and it reflected on traffic. Now afternoon peaks are close to pre-COVID levels even the NTE had entered mandatory mode several times during December. Some of these managed lanes are very young and were still ramping up prices. We also benefited from heavy vehicles resilience supported by e-commerce that helped to have healthy increases of average revenue per transaction. LBU…LBJ, as commented previously, distributed its first dividend last year, EUR 109 million at Ferrovial's share, and NTE distributed EUR 25 million to Ferrovial.

Debt service coverage ratio is 1.2x for NTE and LBJ and NTE 35 West cannot pay dividends until 5 years after fully opened, which will happen in 2023. We also refinanced the PABs at LBJ, reducing interest payments by USD 22 million per annum.

Looking at the main indicators for Dallas-Fort Worth of population and economic growth, the perspective for managed lanes there looks great. This area brought many new businesses last year with a 1.7% increase in population, and it is expected to add another 4 million in the next 20 years, thanks to a diversified and dynamic economy.

Our managed lanes are located close to the most congested areas of the region and will add great value to our customers in terms of time savings and reliability. In terms of e-commerce, things are also looking good, different statistics but all pointing in the same direction, with very relevant growth in the next 10 years. Most of the new warehouses in the area

are located close to our managed lanes. We have already talked about the benefits, so I do not need to do it again, but e-commerce has a multiplier effect with additional positive changes on traffic patterns.

Now touching work from home. In the case of Dallas, we are giving some external data that will be useful. Before the pandemic, 8% worked only from home more than 2 times a month. During peak COVID, work from home rose to around 30% to 45%. In the case of Dallas, office occupancy stands at 37.1% in February, one of the highest in the country and considering that offices are restricted to 50% capacity. According to Georgia Tech studies, work from home could reach 10% after the pandemic. It is true that work from home could bring some work flexibility, but we can also adapt our toll rates to change in patterns in a more congested area. Also, it is relevant to understand that 82% of our managed lanes, customers use them less than 1 trip per month; and that only 0.5% of light vehicles customers made more than 5 trips a week pre COVID.

Moving to Heathrow. Total passengers last year were 22.1 million, a 72.7% reduction versus previous year even with an increase in cargo performance and the concentration of incumbent airlines and 8 new entrants. Our EBITDA was GBP 270 million, with GBP 184 million exceptional costs related to business transformation and asset impairments and write-offs. Heathrow reduced OpEx by GBP 303 million in 2020 and deferred or cancelled GBP 700 million of CapEx.

Financial position of GBP 3.9 billion, sufficient liquidity to cover next 18 to 28 or 24 months. We took adequate measure to strength the capital structure and mitigate pre-2021 in anticipation of continuous mobility restrictions that will be relaxed, hopefully, during the year.

Looking ahead at Heathrow. An investor report prepared in December, they were expecting 37 million passengers in 2021; and no covenant breach, considering mitigation measures; and cost savings. 2021 is an intense year in terms of regulatory development for Heathrow. CAA launched this month a new consultation with 4 options to deal with these exceptional circumstances, in which no intervention is not an option. We expect CAA will define a regulatory framework not only to recover of investment provided to improve Heathrow for customers, but also to get fair return.

Also this year, the CAA must define H7 regulatory framework that needs to rebalance risk and return and consider a business plan affected by the pandemic. The CAA must ultimately take a decision, but failure to act in the right way and in a timely manner will see confidence in effective regulation evaporate. Our expansion, as you know, supreme court unanimously ruled the ANPS as lawful, and Heathrow will consult with all stakeholders on next steps considering green growth agenda and the need of additional airport capacity. Sustainability is a strong part of Heathrow's strategy. It has a plan to achieve net 0 emissions by 2050, a sustainability strategy aligned with UN Sustainable Development Goals and is advancing toward full maturity in its disclosure.

AGS also suffered a traffic reduction of 75.9%, with a GBP 25 million negative EBITDA. Like Heathrow, we took the steps to reduce OpEx by GBP 37 million and CapEx by GBP 25 million. Total debt is GBP 739 million, with maturity in 2022, and we have ongoing dialogues to extend current financing package. So far, GBP 50 million have been contributed by shareholders, with a Ferrovial share of GBP 25 million.

Construction had a good 2020 with 11.4% increase in revenues and better EBIT margins than expected, despite EUR 49 million COVID impact. EBIT margin stood at 2.3%, which is considerably better than the 1% that we expected to end the year with. This improvement was supported by the strong performance of Budimex in all its business lines that increased EBIT margin from 4% in 2019 to 7.6% in 2020. Very solid activity cash flow generation of EUR 293 million, that includes EUR 98 million of divestments, and it is also supported by Budimex and the positive trend in collections.

Other events to date include the conditional agreement reached this month to sell Budimex real estate business for EUR 331 million; and the agreement to sell 100% of Prisiones Figueras for EUR 41 million and 22% of URBICSA for EUR 16 million, which was reached last December and is pending approval. Some of the impacts in the last year activity cash flow generation are exceptional. In 2021, U.S. works is still expected to consume cash.

We continue with the sale of our Services division. We closed the sale of Broadspectrum last year and continue with the sale of subsets. This business generated a strong activity cash flow last year of EUR 275 million, excluding the EUR 300 million sale of Broadspectrum, thanks in part to good collections.

We were affected by COVID, especially at the beginning of the pandemic, with an estimated negative impact of EUR 100 million, but we recovered that at the end of the year, especially in Spain with revenues, EBITDA and margins above those in 2019.

And now Ernesto will continue with the financial results.

Ernesto López Mozo, Ferrovial, S.A. - CFO

Thank you, Ignacio. And good afternoon, good morning.

Well, starting in the results below the operating EBITDA. We have the disposals and EBIT. We have the disposals and impairments. And here we have a low number for this year. In 2019, please remember that we had the divestment of Ausol with that important capital gain.

If we get into financial results, really we can explain the main difference, just by the performance of the equity swaps that hedge the share plans for employees. Remember that in 2019 we had an appreciation of the share that led to a EUR 25 million income from these hedges, but the drop in 2020 has meant a EUR 10 million drop. This EUR 35 million difference is the main explanation for this difference in financial expenses. You have other effects that are described here in this slide but pretty much offset one another.

If we go into the equity-accounted affiliates. As Ignacio was mentioning before, the drop in traffic has affected the results from Airports, Heathrow mainly. That is the main impact in this caption, and the depreciation and financial expenses have weighed heavily in the results here, but also there are other extraordinary items, most of them non-cash, that are described at the bottom of the slide that I will briefly comment.

The first one is derivatives that you know, from other presentations, to hedge inflation exposure to the RAB and revenues and also cross currency swaps. All these are economic hedges, but they don't have treatment in accounting for hedges, right? I would like to thank for all the comments that have been given to IFRIC on the interpretation of the standard and looking for hedge treatment for these volatile results.

In terms of fixed assets, we have had some write-offs. These are of projects that no longer would be pursued, and you don't capitalize them, you have to spend them. Then you have a positive inflow in pensions that is GBP 11.5 million, and this is reflecting the better conditions after the negotiation with the employees to make Heathrow more efficient. Of course, all these initiatives, of course, efficiencies have come with restructuring provisions that we mention there, GBP 32.5 million. All these are at our share.

And then you have the last one is the change in the U.K. corporate income tax that has an effect on deferred tax liabilities of GBP 27.8 million. Of course, this is a non-cash item, okay? So Heathrow is affected by this volatility in results and most of them doesn't impact in cash terms.

If we move into the corporate income tax. I mean, if you take into account that equity-accounted affiliates already come net of taxes, you will see that this positive income from taxes compared to the profit before taxes. Well, this is due to the recognition of deferred tax assets in Spain and the U.S. Even though we have a prudent approach, we had to release and bring to the balance sheet those credits.

Then you have the net profit from discontinued operations, and here you have a mix of a fair value adjustment in Amey of EUR 34 million. Well, this is related to some specific projects. I mean we corrected the carrying amount of investment in these projects because they are likely or subject to be sold separately, ok? Had they been in the mix of Amey, probably they wouldn't have had this impact. Then we have something similar in Ferrovial Services International of EUR 25 million.

The impact of Broadspectrum was discussed in other meetings, and basically it's translation differences that have to come to the P&L once it's sold. And last but not least, we have a positive inflow of, well, a positive recognition of EUR 121 million in Ferrovial Services Spain. And here, according to the standards, you recognize the results. There's headroom in the fair value, and these results reflect the good performance in particular of the waste treatment business.

Ok, so with all that, let's move to the following slide to look at the cash generation, and here we see different inflows. We have the dividends from projects, EUR 458 million. Here you have probably noticed that we have dividends from Toll roads in EUR 340 million, Airports EUR 29 million. Therefore, the rest is from concessions from Services, they are from waste concessions or tunnel operation concessions, and these are in the process of being sold. We have had these dividends ahead of the sale.

Then we have the EBITDA and the working capital evolution. Here the working capital evolution, I would like to mention that the improvement is in part due to, an important part due to better collection from public clients. And this is something we expect to continue until the economy is in a more solid footing, ok? So good days of collection here.

Then in taxes, the main component is Poland. And then here in Poland the underlying business is very solid, and therefore if you take provisions for and then of contracts or whatever, they are not tax deductible, that's the reason why we have this cash outflow in taxes.

Then we have investments and divestments that we have mentioned and shareholder remuneration.

In other financing cash flows, just to close the gap with the final position, we have the deconsolidation of the net cash from Broadspectrum. We also have dividends to minorities in Budimex that comes from here and then FX translation effects in cash balances in zlotys and U.S. dollars.

I mean it has been a very good year in cash generation. The position has improved then EUR 360 million, and we leave the year with EUR 2 billion in net cash position.

And now let me hand over to Rafael for the closing remarks.

Rafael del Pino y Calvo-Sotelo, Ferrovial, S.A. - Chairman of the Board

Thank you, Ernesto. Well, as I said before, in the current situation, visibility remains limited and it is difficult to provide any guidance. This being said, we remain confident that, when we look ahead, that our assets have long duration, are located in diversified growth areas, have flexibility to adapt to changes in behavior patterns that may come and should play a key role in relieving capacity constraints in the region.

Our strategy is also clear, focusing on developing efficient, innovative and sustainable infrastructure that will create value for all our stakeholders, and we see clear opportunities ahead not only building on our competitive advantages but also having enough financial strength to reap attractive growth opportunities that we believe will come.

Lastly, looking at shareholder remuneration, the Board has approved 2 scrip dividends, which as reference would imply EUR 0.20 and EUR 0.313 per share. And we will continue with our share buyback program of up to EUR 320 million or 22 million shares.

So now we open the floor to questions.

Thank you.

Begoña?

Begoña Morenés, Ferrovial, S.A. - IR Director

Thank you very much, Rafael, Ignacio and Ernesto. The Q&A session will begin shortly. Please stay tuned.

Q&A SESSION

Begoña Morenés, Ferrovial, S.A. - IR Director

So, the first set of questions come from Alejandro Vigil from Bestinver. First of all, on tariffs proposal of the new Highway 413, what is Ferrovial's view of the possibility and its impact in the 407 ETR?

Ignacio Madridejos Fernández, Ferrovial, S.A. - CEO

So, thank you, Alejandro. And yes, I commented previously on the 413 that, as you saw, is very far from the congestion in the area; and also is very close to a green belt with not a lot of residential business around that area. Because of that, what we consider that if this project goes ahead, that it will take time before they get environmental assessment approval; and then the construction, that it will not happen before 10, 15 years. You have to get the environmental approval, considering that it's a green belt. Our estimates at that time is that the impact on traffic for the 407 will be minimal, because we are much closer to the congestion area, and we have the time savings that the 413 will not have.

Begoña Morenés, Ferrovial, S.A. - IR Director

Thank you, Ignacio. The next question, also from Alejandro, dividend to be collected, in terms of expectations for 2021 and 2022, and CapEx commitment in '21 and '22, referring to the 407 ETR.

Ernesto López Mozo, Ferrovial, S.A. - CFO

Ok, thanks. So I mean we don't provide guidance for expectations of dividends in the 407 under the current situation.

What we've always mentioned is that dividends in 2021 will have to be back loaded at the end of the year due to the natural evolution of the traffic, right? I mean remember that in 2020, the pandemic hit more deeply in April, or mid-March through June, right? So that comparison would affect to the, let's say, ratios needed for the payment of dividends. So, we expect dividends to be backloaded in the second half of the year, more at the end.

Regarding the CapEx commitments: Well, the 407, you know that, on a regular basis invests close to CAD 100 million in widenings and refurbishments, and we would expect something below that, but that should be the normal running number here.

Begoña Morenés, Ferrovial, S.A. - IR Director

Thank you, Ernesto. The next question, also from Alejandro, dividend…apologies. Pipeline of new infrastructure projects, opportunities for Ferrovial in U.S. managed lanes, etc.

Ignacio Madridejos Fernández, Ferrovial, S.A. - CEO

As I commented previously, for us, a relevant part of our strategy is to develop toll roads in the U.S. managed lanes, and it will continue to be the case. We have identified as part of the pipeline, and we include there managed lanes but also other toll roads in other markets, but the total amount is EUR 8 billion of equity. It's a pipeline that is including unsolicited projects. We are not disclosing the places in which we are working yet, but the main focus is in the U.S. Of course, this is a pipeline that takes time, and some of these projects may not happen in the future, and some of them, I mean, will be a competitive bidding like the one in Maryland.

Begoña Morenés, Ferrovial, S.A. - IR Director

Thank you, Ignacio. The next question, also from Alejandro: Could you update on the disposal process on Services?

Ignacio Madridejos Fernández, Ferrovial, S.A. - CEO

Yes, as commented, we are proceeding with the sale of subsets. So everything is under sale right now in different processes, and as soon as we have some information that we closed an agreement with a buyer, we will communicate, but hopefully, we'll see some traction during this year 2021. We are working on all separate subsets and we'll communicate whenever we have information to share with you.

Begoña Morenés, Ferrovial, S.A. - IR Director

Thank you, Ignacio. The last question from Alejandro refers to new businesses. There's media coverage regarding the interest in transmission lines in Chile, flying taxis venture in Florida, etc, etc. What would be the investment size in the new businesses

Ignacio Madridejos Fernández, Ferrovial, S.A. - CEO

Yes, as commented, as part of our strategy, we are interested in developing other infra-assets. And we define there a pipeline that around EUR 0.5 billion, say, in transmission lines in general. This is mainly in Latin American markets - it could be Chile, Colombia, Peru or others. And we are working on them. Of course, we don't comment about any specific transaction or bidding process in which we are.

Mobility, as you know, we are there in order to understand how the new infra is going to develop. And one of the things that is happening today is talking a lot about the eVTOL and vertiports, and what we are doing is trying to learn about the new infra that is going to be needed for these new types of mobility.

Of course, this is a very limited investment that it will happen in several years' time, and what we are doing right now is learning. Of course, we have reached an agreement and was well communicated with Lilium; and exploring in Florida, a number of vertiports there, but I think that location is important and that's why we are anticipating for a new infra that may be needed in the future.

Begoña Morenés, Ferrovial, S.A. - IR Director

Thank you, Ignacio. The next set of questions come from Filipe Leite from CaixaBank BPI. "Can you give us an update on the situation of the Maryland managed lanes?"

Ignacio Madridejos Fernández, Ferrovial, S.A. - CEO

Well, yes. About Maryland, as you know, we are the largest developer, builder and operator of managed lanes in the U.S. with a proven expertise in these complex projects. The decision was communicated last week , and in which there was defined, another consortia as winner. We are, as a result of that announcement and result of the significant gap in the financial score of the bidders communicated to the public by the owner, we are in the process of analysing the results and information provided in connection to the bid process. We have signed a confidentiality agreement, and unfortunately, I cannot comment further at this point in time, but I can assure you that we are very focused on continue developing managed lanes in the U.S.

Begoña Morenés, Ferrovial, S.A. - IR Director

Thank you, Ignacio. Lastly from Filipe: Do you expect dividends from infrastructure assets in 2021 and '22 to cover the required equity investment in the I-66?

Ignacio Madridejos Fernández, Ferrovial, S.A. - CEO

Well, the CapEx investment in the I-66 next year is around EUR 600 million, a figure close to that - in 2 years, no, yes. Sorry, so it will not happen only next year, but it's between this and the following year is around -- we don't give any, of course, guidance about what is going to be the dividends. And the rationale was explained before by Ernesto in the case of 407 and similar and other places, but we don't give information about expected dividends and guidance about that.

Begoña Morenés, Ferrovial, S.A. - IR Director

Thank you, Ignacio. The next set of questions come from Fernando Lafuente from Alantra Capital. On the 407 ETR, Schedule 22 scheme. If it were to apply for 2020, what would be the penalty that you would face?

Ignacio Madridejos Fernández, Ferrovial, S.A. - CEO

Well, as commented right now, we are - pandemic is a force majeure clause as part of the contract. And at the same time, the spirit of that clause is related to congestion in the area, especially the 401, so that's why we didn't take any provision for Schedule 22 payments since the beginning of the pandemic.

In the future, of course, when it is over - and as you know, it's the way it works that this traffic is compared to certain target, and there is a penalty that you have to pay if you don't reach those targets, but the reference, as you know, is 2019, in which we paid less than CAD 3 million with the traffic at that time.

Begoña Morenés, Ferrovial, S.A. - IR Director

Thank you, Ignacio. The next question from Fernando, regarding 407 ETR tariffs. They were flat year-to-date, but given the difference in traffic mix, what are the average tariffs going to do in 2021? Are they growing, thanks to the traffic mix?

Ignacio Madridejos Fernández, Ferrovial, S.A. - CEO

Last year, as you know, as commented previously, we increased tariffs in February last year. Since then, we have kept them flat. We have not announced an increase for 2021, but as you know, we have the flexibility to do that at any point of time if the traffic recovers.

With that price flat, of course, yes, it will depend on the timing of the traffic, the traffic mix and other parameters, that the road - I mean that may change if it's peak or not peak or is a good section of the road and so on. That w e have, as you know, different type of tariffs different time of the day with different type of vehicles. So that will depend on that until we decide to change the tariffs.

Begoña Morenés, Ferrovial, S.A. - IR Director

Thank you very much Ignacio. The next question, also from Fernando, and his last one, regarding Construction EBITDA and EBIT. It almost doubled at year-end versus the 9 months 2020 results. Can you explain why? Does it include any exceptionals, or is the performance sustainable going forward? In addition, what is the EBIT margin guidance for 2021?

Ignacio Madridejos Fernández, Ferrovial, S.A. - CEO

The guidance that we gave about that is 3.5% EBIT by year 2024, and this is what we are working for, and at the end, yes, of the quarter, I think we have a good performance coming from Budimex, and especially from the real estate business. And I don't know if…Ernesto, do you want to comment something further?

Ernesto López Mozo, Ferrovial, S.A. - CFO

Yes. Well, regarding the margins, the fourth quarter was very good for different reasons in all Construction. I can mention some of them. Well, the first one is that impact from COVID-19 were not really that material in the fourth quarter. I mean the cumulative for the year is close to EUR 49 million, and in September, we were at EUR 44 million.

So very limited impact and very good production, even though there were a lot of lockdowns, I mean, our sites continued producing very well. Then in Budimex it's true that the real estate business was doing very well and even had some release of provisions, but clearly had a very good quarter. And also we had in other regions some claims that were recognised and collected end of the year. So yes, a very good quarter. We cannot extrapolate, let's say, the margin for this quarter going forward.

Begoña Morenés, Ferrovial, S.A. - IR Director

Thank you, Ignacio and Ernesto. The next set of questions come from Marcin Wojtal from Bank of America. What will be the dividend policy of NTE and LBJ managed lanes going forward? Will they distribute 100% of their free cash flow?

Ignacio Madridejos Fernández, Ferrovial, S.A. - CEO

Well, the decision about dividends will be taken by the Board of the NTE and LBJ - and of course, it will be based on the traffic evolution and their expectations and also with the goal to keep investment grades in all the…both NTE and LBJ, and based on that, they will distribute the dividends.

Begoña Morenés, Ferrovial, S.A. - IR Director

Thank you, Ignacio. Also from Marcin: How much of the traffic in 407 ETR and U.S. managed lanes relates to daily commuting?

Ignacio Madridejos Fernández, Ferrovial, S.A. - CEO

We don't disclose information about that, but during the presentation today we gave some information about that usually users don't use it - very few use it more than 5 times a week. So very few are daily commuters but.. that use regularly. So most people use 3 times a month or less.

Begoña Morenés, Ferrovial, S.A. - IR Director

Thank you, Ignacio. Lastly from Marcin: Should the grantor require the 407 ETR to make a payment based on Schedule 22 for 2020, is there any mechanism to appeal such a decision?

Ignacio Madridejos Fernández, Ferrovial, S.A. - CEO

Yes, there is an appeal process that we can bring, and yes, it will be based, of course, on the contract, but yes, we can appeal to the decision.

Begoña Morenés, Ferrovial, S.A. - IR Director

Thank you, Ignacio. The next set of questions come from Jenny Ping from Citigroup. "Can you tell us how the recent extreme weather has impacted mobility in Texas?"

Ignacio Madridejos Fernández, Ferrovial, S.A. - CEO

Well, it has been very, very sad no, what happened in Texas with this winter storm and which impacted not only the traffic but also the power and water outage that affected so many people. And so many there some people affected. I have to say that, yes, because of the winter storm, most of the lines of our main toll roads were closed. And we only habilitated one or two lanes, that they were cleaned during the winter storm. So, it affected from the February 13 to 21, in which we closed the managed lanes, and also the general-purpose lanes was only one or two lanes that were in perfect condition for the traffic. So yes, we were affected by the winter storm during this period of time.

Begoña Morenés, Ferrovial, S.A. - IR Director

Thank you, Ignacio. Also from Jenny. Can you confirm if the recent accident in Texas highway on your tolled…was on your tolled assets? If so, can you give us more details of the closure of such an asset?

Ignacio Madridejos Fernández, Ferrovial, S.A. - CEO

Yes. As commented previously about this exceptional winter storm, that it affected car accidents, but also power and water outage. There was a multiple collision in the NTE 3 project and, sadly, resulting in 6 fatalities and several people injured. Prior to the accident, NTE 35 West pre-treated the road in accordance with applicable standards, best practices; and continued to patrol and monitor the road conditions through the storm.

In addition, at the time of the incident electronical variable signals was advising drivers of the adverse weather condition and asking drivers to proceed with caution. And yes, we are cooperating with authorities' investigation, especially the NTSB. That is the one in charge of this investigation.

Begoña Morenés, Ferrovial, S.A. - IR Director

Thank you, Ignacio. The next question comes from Robert Crimes from Insight. How keen were you to win Maryland phase 1? What were the main differences in the Ferrovial bid and that of winner Transurban?

Ignacio Madridejos Fernández, Ferrovial, S.A. - CEO

Well, of course, I mean, this was a very relevant project for us, and as commented previously, we are the largest developer, builder and operator of managed lanes. So, we put all our expertise, proven expertise, in these complex projects that we think, that we could deliver in an excellent way. Also as commented previously about, yes, on this, when the communication coming from the -- to the public by the owner, we saw a significant gap in the financial score.

And what we are now is in the process of analysing these results, and any information provided in connection to the bid process. Unfortunately, at this point of time, we cannot say more because of this confidentiality agreement that we signed, but we are, I mean, very open in the future to comment about it, once we don't have this NDA in place or with any public information that could come from the owner in the following days.

Begoña Morenés, Ferrovial, S.A. - IR Director

Thank you, Ignacio. The next set of questions come from José Arroyas from Santander. Will Ferrovial not participate in phase 2 of the Maryland traffic relief programme?

Ignacio Madridejos Fernández, Ferrovial, S.A. - CEO

Well, at this time, Maryland DOT selected the phase developer that is for phase 1. And they also will have a right to develop the second phase. So, if they close and they reach commercial agreement, they will have a right to develop the following phase.

Begoña Morenés, Ferrovial, S.A. - IR Director

Thank you, Ignacio. Also from José. Ferrovial's holding company is very strongly capitalised now with net cash approaching EUR 2 billion and further expected cash inflows in 2021 from planned sales of other assets. How should we think about Ferrovial using this cash in the medium and long term?

Ignacio Madridejos Fernández, Ferrovial, S.A. - CEO

Well, the first priority will be to develop the pipeline that we have commented previously. We'll focus on developing managed lanes in the U.S. and toll roads, airports and other infra-assets. So hopefully, we'll develop enough opportunities with double-digit return that we require to our investments. And we'll allocate this money to develop this infrastructure.

Begoña Morenés, Ferrovial, S.A. - IR Director

Thank you, Ignacio. Next set of questions come from Nabil Ahmed from Barclays. First of all, you mentioned flat prices for 407 ETR. Could you please elaborate on Texas managed lane pricing strategy this year? Is it fair to assume modest or no increase initially and maybe the unwinding of the positive mix when traffic normalises?

Ignacio Madridejos Fernández, Ferrovial, S.A. - CEO

Well, in the case of the Dallas managed lanes and the pricing expectations, they're… first, you have to consider that we are ramping up some of these assets and also in---not only in traffic but also in terms of pricing, especially the NTE 35 West. And still also we have, say, opportunities at the NTE level and, of course, the I-77, of course.

Also we have price flexibility. As commented, we may see some changes in traffic patterns, especially during the mid-day that we see more traffic than before. So, there will be opportunities to take advantage of these traffic patterns to - with the price flexibility that we have. Also we have some inflation increase in the soft cap. There may be, depending on the traffic, increases based on mandatory mode, and also, mixed traffic, that also could influence the evolution of tariffs in these managed lanes. So these are the things, but of course, it will depend on the traffic and the opportunities that we may have based always on the value that we can give customers for time savings and reliability.

Begoña Morenés, Ferrovial, S.A. - IR Director

Thank you, Ignacio. Next question, also from Nabil. Could you please elaborate about the GBP 600 million cash injection in Heathrow SP in the fourth quarter of the year? Would you expect to contribute more?

Ernesto López Mozo, Ferrovial, S.A. - CFO

Yes. Thanks for the question, Nabil.

Well, the first is I need to clear out where this money comes from. I mean Heathrow raised deeply subordinated debt, GBP 750 million, above Heathrow Finance. That is holding above Heathrow SP. Ok, so we have 3 layers. This layer that is the most subordinated, GBP 750 million were raised in the market, and this was subsequently injected into Heathrow

Finance and Heathrow SP. So. the GBP 600 million equity into Heathrow SP comes from that capital market transaction, so it has not been direct cash by shareholders. Of course, it's equity for Heathrow SP, the ring-fenced, ok?

So the question is if we expect…sorry. The last question was are we expecting to do more of these. Well, there's plenty of liquidity right now. There's no need for further liquidity. In terms of covenants, Heathrow explained very well in yesterday's results conference call that, according to their projections of 37 million passengers, there is no need, no risk in covenants.

If a severe but downside plausible scenario, let's say, the dimension of 27 million passengers, also could be handled with some of the mitigating actions that they have, so they have a lot of leeway. Of course, if the situation is worse, we would have to readdress this. But with the current scenario that Heathrow has, there is no need for, let's say, additional liquidity or capital.

Begoña Morenés, Ferrovial, S.A. - IR Director

Thank you, Ernesto. The next question, also from Nabil. "Heathrow liquidity seems to be managed for 2021 only. What if the CAA regulation does not come in time or does not provide the support that you are hoping for?"

Ernesto López Mozo, Ferrovial, S.A. - CFO

Well, really Heathrow is not asking the regulator for liquidity. I mean this needs to be very clear. What Heathrow is asking for is a restatement of the RAB that covers for the recovery of the investment a long time. In the future, when users use the airport, would be paying the investment and the returns, or is the minimum required and return and the recovery of the investment that Heathrow is asking for.

You have to remember that the asset is being depreciated now and without any income, right? So that's like, let's say, not recovering the investments, like, given that investment for free, right? So what Heathrow is asking for is for regulation to act here and protect the investment, of course, investment that will be collected in the future. So, it's not asking for liquidity now.

Begoña Morenés, Ferrovial, S.A. - IR Director

The next set of questions come from Luis Prieto at Kepler Cheuvreux. First question, "Can a situation in which shareholders have to inject capital into Heathrow topco be completely ruled out?" I'm sorry. This question has already been answered previously by Ernesto. I will move on to the following question. "Could you please provide a bit of granularity on the potential North American project pipeline, including the EUR 8 billion figure on Slide 5?"

Ignacio Madridejos Fernández, Ferrovial, S.A. - CEO

So, this U.S. is most of this EUR 8 billion equity. So, we are working mainly to develop mainly managed lanes in the U.S., also in other toll roads, that the traffic risks that there could be in the U.S., but it's mainly managed lanes. Some of the projects, most of them, are unsolicited that we are working with DOTs.

We are including also other projects, but smaller ones in Chile, Peru and Colombia, compared to that. We don't disclose further information for the time being because, I mean, this…we don't want to give information to competitors about which projects we are working, but you can assume that most of it is related to the U.S. and most of it to managed lanes.

Begoña Morenés, Ferrovial, S.A. - IR Director

Thank you, Ignacio. The next set of questions come from Rushil Paiva from Stifel Europe. Question number one, "Do you have an estimate of where you think the Construction Division's underlying EBIT margin currently sits? And do you have a target margin for 2021?" Part of this has already been answered before. Additionally, is the 2024 EBIT margin of 3.5% still maintained?

Ignacio Madridejos Fernández, Ferrovial, S.A. - CEO

Yes, it is maintained. As commented previously, our target is to reach the 3.5% margin by 2024. We don't disclose internal targets for 2021. Yes, we have them, but we are not disclosing it. But we are working hard to reach this 3.5% by 2024.

Begoña Morenés, Ferrovial, S.A. - IR Director

Thank you, Ignacio. The next question, also from Rushil: Are you able to provide an update on motorway traffic across the U.S. managed lanes business and 407 ETR in the year-to-date, especially as the risk from COVID-19 in the United States seems to be slowing in the past few weeks?

Ignacio Madridejos Fernández, Ferrovial, S.A. - CEO

Well, as commented during the presentation, in the 407 is still at…Toronto area is still at…is until area…stay-at-home order, so the traffic has been affected since the end of December because of that, but not at the levels that we saw in April that were 80% below previous year. It's much better than at that period of time even with a similar lockdown.

Of course, in the following weeks or months, we'll see, hopefully, an improvement with the vaccination and the reduction of new positives in the area and some of the neighborhoods, nor Toronto or Peel but they are starting to relax some of this lockdown, so we expect that it will improve.

In the case of Texas, they are very fast with the vaccination and, as you know, I mean, in some cases 12% or above, and they are, I mean, moving very fast. For the time being, because of Christmas and the effect of Thanksgiving, they maintained still the same mobility restrictions, but we should expect that in the following months we'll see an improvement because of the vaccination reaching certain levels. And the new, I mean, level of positives will be much lower than before. We have been affected, as commented previously, by the winter storm and especially this almost a week in which managed lanes were not operating because of the extreme weather conditions.

Begoña Morenés, Ferrovial, S.A. - IR Director

Thank you, Ignacio. The next question come from Samson Jayes from Ananda Asset Management. Would you consider divesting any further infrastructure assets?

Ignacio Madridejos Fernández, Ferrovial, S.A. - CEO

Well, our strategy is to develop infra-assets, and at the same time, as part of that strategy is to rotate them when, once they are mature. So, I think that the same way that we did with Ausol; or last year with Norte Litoral, for instance, or Algarve. I mean, if some assets are mature and they have more value for a third party than to us, we'll do it.

Begoña Morenés, Ferrovial, S.A. - IR Director

Thank you, Ignacio. Next set of questions come from Tobias Woerner from Stifel Europe. "Do you have railway construction capability in the U.S. given that this is an area of interest for Joe Biden? Is there also an opportunity for railway concessions? And if so, would you be interested?

Ignacio Madridejos Fernández, Ferrovial, S.A. - CEO

Yes, we will be interested in rail opportunities in the areas in which we have construction capabilities in the U.S. We are doing today, construction, the high-speed rail in California, one of the sections - we are building them today. So yes, we have…we are doing metros, and there are metros in many other places. So yes, we have real capabilities that, if

there are concession, we will…we are very open to analyze, but only restricted to the places where we have construction capabilities.

Begoña Morenés, Ferrovial, S.A. - IR Director

Thank you, Ignacio. Also from Tobias. How do you see the recovery for Heathrow in terms of profitability over the years? What things do we have to consider long-term effects of the crisis?

Ignacio Madridejos Fernández, Ferrovial, S.A. - CEO

Well, as you know, Heathrow is a regulated asset. There will be H7 period in which we are considering as part of the business plan that it will take a long period of time to recover the level of traffic that we had before, but we'll recover, and we expect to have a return for the investment that we have made during this period of time based on the traffic that we are forecasting. So even if we see that there may be an impact in the short-term to recover the level of passengers, that will be included as part of the business plan and also as part of the number of passengers and the returns that they are giving to the investment that we are taking there or we have taken there.

Begoña Morenés, Ferrovial, S.A. - IR Director

Thank you, Ignacio. Also from Tobias, "What about AGS? Do you need to insert capital here, over and above the GBP 25 million already committed?"

Ernesto López Mozo, Ferrovial, S.A. - CFO

Ok, so here the GBP 25 million committed, I mean, is what is expected in terms of liquidity needs maybe for this year with some recovery in traffic. What is true is that negotiations to extend the financing will take place, and then of course, this will be commercially sensitive. There could be a number of capital parts of the refinancing discussions, but that is something that we will see a long time. In term of liquidity needs, it will be more or less enough.

Begoña Morenés, Ferrovial, S.A. - IR Director

Thank you, Ernesto. Lastly from Tobias. What impact could you see the EU next-generation recovery plan to have on your activities in Europe and Spain and Poland? When do you expect this to take place?

Ignacio Madridejos Fernández, Ferrovial, S.A. - CEO

Well, we have presented several initiatives for these next years. And so we have…hopefully, we'll see some traction during this year, but it's a large amount for a stimulus. It's mainly related to things that could improve the sustainability , the digital and also the regional inclusion. So, we will participate in parts of it and mainly related to… in Spain to residential buildings, improvement in some of the projects that there could be. So it could be a large pipeline, nothing concrete in the short term. We have presented several proposals, and let's see which of them we'll have the capabilities, and we can take value out of them, but still there is nothing concrete in the short term.

Begoña Morenés, Ferrovial, S.A. - IR Director

Thank you, Ignacio. The next question comes from Nicolas Mora from Morgan Stanley. In terms of disposals, the bears will say you seem engulfed in a fire sale of assets. The bulls will say that you're building a large comfortable buffer in terms of liquidity. How should we understand the meaningful pickup in disposals at all the business levels?

Ignacio Madridejos Fernández, Ferrovial, S.A. - CEO

Well, it is part of our strategy that we have defined before. So, we are concentrating on developing and operating innovative, efficient and sustainable infrastructure, and the core business are related to toll roads, airports, construction and also other infra assets that we want to develop. So, at the end, those that are not related like the Services Division, so we are divesting.

Also, as commented previously, those that are mature and availabilities that has more value for a third party, like the type of Ausol's that we have financial institutions. They are taking them from much lower returns than they were, we are expecting from investments. Well, we rotate them once they are mature, like availabilities. But I will say that all what we are doing is part of our strategy, and our main value is related to developing infra-assets, and those like services, we'll divest it.

Begoña Morenés, Ferrovial, S.A. - IR Director

Thank you, Ignacio. The next set of questions come from Charles Maynadier from Kempen. What is the timeline of the 9.5 billion pipeline described for Toll roads, Airports, electrification and water?

Ignacio Madridejos Fernández, Ferrovial, S.A. - CEO

Well, this is the pipeline, I think, which we are working, I will say, for the next 3 years. Of course, as commented previously, maybe some of it will not happen, but things I think which some of them we are bidding or preparing to bid and others in which we are still working, and we may see that this launch in the following months.

Hopefully, I think that, as part of the recovery and with COVID, we'll see more traction with some of the projects, and hopefully, we see them transform into opportunities very soon.

Begoña Morenés, Ferrovial, S.A. - IR Director

Thank you, Ignacio, also from Charles. Could you remind us what the rationale is to go into electrification and water opportunities compared to staying in transportation infrastructure? Could you share some color on the competitive landscape regarding this pipeline?

Ignacio Madridejos Fernández, Ferrovial, S.A. - CEO

Yes. As you saw before, I mean, the main pipeline and things in which we are working are related to Toll roads and also Airports, and still the pipeline that we have related to electrification and water is not very large. It's less than 0.5 billion.

We already have capabilities in both water and electrification. In the case of electrification, we have transmission lines in Chile. Also, we have EPR contractor capabilities, we are doing renewable energy, renewable projects, we are doing substations, we are doing concessional projects, energy efficiency also in Spain and other markets. So it's an area in which we feel comfortable.

It will be just reduced to the countries in which we have defined as top tier and core, and there we have the capabilities to develop other infra assets that I think, that it will be increasing in the future, that, the request for this type of proj ects.

Now in the case of water, we have 2 companies, Cadagua, Pepper Lawson in the U.S. and we do contracting work, but also we do some maintenance, and we have capabilities also to do concessional works in water. Some of this pipeline will take longer time, but there are some projects that it may happen at some point of time, especially now with COVID, that municipalities and the different administrations will need more from private investors, in order to develop some of the infrastructure that is very well needed.

So we have capabilities in these areas, and we want to grow them if we see that they are requesting for concessional projects, and we will do them if we see that they create value and we can get these double-digit returns. In some of the places, there are competitors, but I will say there are similar number of competitors than the ones that we see in

the transport business both in Toll roads and airport, not even in Airports. In the past, we used to have more competitors than in this infra electrification and water.

Begoña Morenés, Ferrovial, S.A. - IR Director

Thank you, Ignacio. Last question from Charles. Are you committed to keeping your stake in Budimex? Or can we expect a divestment at some point in the future?

Ignacio Madridejos Fernández, Ferrovial, S.A. - CEO

No, we are comfortable with our position in Budimex. I think it is a key player in the Polish market, I see them more focused on developing infrastructure. They have very good capabilities, so we are very happy with our position in Budimex.

Begoña Morenés, Ferrovial, S.A. - IR Director

Thank you, Ignacio. The last question comes from Elodie Rall from JPMorgan. "When will you be in a position to revert to pre-crisis level of dividends?"

Ignacio Madridejos Fernández, Ferrovial, S.A. - CEO

Well, regarding dividends, of course, we'll take the decisions by the Board, and it will be based on the forecasts that we'll have for the following years of investments that we may have another source of income. Based on that and the cash that we'll generate with a different business, we'll be taking the decision by the Board every year with the same policies that they will have until now.

Begoña Morenés, Ferrovial, S.A. - IR Director

There are no further questions.

Rafael del Pino y Calvo-Sotelo, Ferrovial, S.A. - Chairman of the Board

Ok, thank you very much for attending this 2020 results conference, and look forward to engaging with you again soon. Thank you very much. Good afternoon or good morning to wherever you are.

Good evening. Bye.