Hochtief Ag

Good afternoon to everyone, and thanks for joining us for this Hawke-Teef results call for the first nine months of 24. I'm Mike Pinckney, head of capital market strategy, and I'm here with our CEO, Juan Santamaria, and our CFO, Peter Sassenfeld, as well as our head of IR, Tobias Loskamp, and other colleagues from the senior management team at Hawke-Teef. We look forward to taking your questions later, but to kick off, our CEO is going to run us through the details of this strong set of numbers and provide you with an update on the group strategy. Juan, all yours. Thank you, Mike and team.

Good afternoon to everyone and thanks for joining us. ECOCTIV has delivered a solid performance during the first nine months of 2024, marked by a firm increase in profits sales, and net operating cash flow. This growth is supported by the continued strong expansion of our order book, driven by a further significant rise in the orders, particularly in our strategic growth markets. Furthermore, the group has made important progress in its strategic development with several important transactions. Let's run through the key financial highlights of the first nine months. Group sales of 23.6 billion euros, so a 7% increase year-on-year. Octaves operational net profit rose by 12% to 450 million euros, or 18% on a comparable basis. The nominal net profit of 579 million, up 61% year-on-year, was driven mainly by the strong operational profit growth and a 147 million one-off non-cash gain net of provisions in the second quarter. In terms of cash generation, and looking at the last 12 months, operating cash flow stands at a high level of around 1.8 billion euros. HoCTIF ended September with a net debt position driven by strategic capital allocation decisions taken during the period, as well as seasonality effects year-to-date. This strong growth trend in project wins has continued with new orders up 15% year-on-year to 32.1 billion euros. On the cash flow front, it's worth noting the following. The last 12 months performance with operating cash flow of 1.8 billion implies an increase of over 430 million euros in year and underlines the strong cash generation the group is delivering. If we consider just the nine months of 2024, octave cash flow shows a 64 million euro year-on-year improvement after next capex and leases. On the next slide, we can see the movement in net cash debt. COCTIV ended the period with a net debt position of 1.66 billion euros, driven by these strategic investment decisions taken through foreign countries for end seasonality. The year-on-year variation, which we show in the chart, is affected by several factors. The full consolidation of this, following the acquisition of an additional 10% stake, the Abertis capital increase, where Hoctiv subscribed €260 million for its 20% share, bought on M&A, FX effects of over €200 million, and the Hoctiv dividend of €331 million, which we distributed in July. Adjusting for these impacts, net cash would now stand at €790 million, And this would imply a year-on-year increase of almost 860 million euros. Let's take a closer look at new orders, where the group's order backlog ended September 2024 at a record level of 66 billion euros. This represents an increase of 18% year-on-year or 10% on a comparable basis, adjusting for the consolidation impact of this. This strong growth in our order book reflects the group's success in securing a significant increase in new orders, up 15% year-on-year, particularly of advanced tech, energy transition, and sustainable infrastructure projects. The strategic growth markets accounted for around 50% of the new work won during the period and continue to offer very substantial revenue growth opportunities going forward. Turning to the performance on a segment level, Let me mention some of the key highlights. On sales of 13.6 billion euros, up 14%, Turner achieved an operational PVT of 393 million euros for the first nine months of the year. This level of profits represents a very impressive increase of almost 40% year-on-year, or over 110 million euros in absolute terms. Turner. has increased its operational PVT margin by 50 basis points to 2.9% in the period, compared with 2.4% in the first nine months of 2023. And during the both second and third quarters, Turner has delivered a 3% margin. Margin expansion is being driven by Turner's successful strategy on advanced technology project opportunities and source blue supply chain service solutions. The company achieved very strong and sustained growth. New orders at 32% to 19.3 billion euros and a new record backlog of over 30 billion. At CIMIC, operational PVT of 312 million was up 4% on a comparable basis year-on-year. Operational net profit increased by 10% to 187 million euros, whilst nominal net profit reached 335. million euros, which includes a second quarter one-off cash gain of 147 million net off provisions. And CIMIC delivered a robust order backlog progression with 6% growth year-on-year to 24.6 billion euros. At our engineering and construction segment, sales increased by 12% year-on-year to 2.75 billion. Operational PVT was stable at 61 million euros with some project mix effects at the margin level. The ANC order backlog of almost 11.1 billion was up slightly during the year with new orders of 3.2 billion solid at over 1.1 times work time. During nine months 2023, two major European project wins totaling over 1 billion were secured. And looking at Abertis, average daily traffic was up 1% during the first nine months with operating revenues rising 9% and EBITDA up 10% supported by solid tariff increases. Operational net profit pre-BPA amounted to 605 million euros at a similar level to last year. The nominal net profit figure incorporates the impact of the early termination of the Texas toll road. So let me move on and give you an update on the strategic front. Infrastructure sector investment is undergoing unprecedented and multi-year transformation, driven what I like to term the four Ds, digitalization, demographics, decarbonization, and legalization. Octive has positioned itself as a leading infrastructure and services provider to meet the rising demand that is being driven by these megatrends. We're achieving This, not just as a developer, but also as an equity investor and operator. And this is consistent with our overall group objective to deliver an attractive level of shareholder remuneration and create long-term value by first, generating cashback profits whilst maintaining a low risk profile. Second, further expanding our presence in the strategic growth markets. And third, also by investing equity in greenfield infrastructure projects accompanied by selective MF. We're delivering on our strategy and are well positioned for current and future opportunities. For example, Octif has carried out several significant M&A transactions during the first nine months of 2024, which support our strategy growth ambitions and further consolidate our strong competitive positions in specific market segments. During the third quarter, Turner has received the approval from the European Commission for the approximately 400 million euros for a tech acquisition we announced in July of Doran Engineering. This rapidly growing European advanced tech engineering business headquartered in Ireland is a leading mechanical and electrical engineering company in Europe and has a 1.1 billion euro order book with strong presence in the UK, Ireland, Germany, Netherlands, Denmark, and Switzerland, amongst others. Dornan is expected to achieve revenues of around 700 million euros in 2024 and EBITDA of around 55 million. The transaction is expected to close in January 2025. Together with Dornan and using the group's existing local capabilities, Dornan intends to offer full turnkey solutions to clients in Europe, applying its low-risk construction management business model to rapidly expanding advanced technology market where it has identified a potential project pipeline of over 20 billion euros. In July, Hochtief and its main shareholder, ACS, agreed to integrate their North American businesses, Flatire and Trocados, to create the second largest civil engineering and construction player in the region. The new company will have unparalleled civil infrastructure experience, credentials, geographical reach, and technical capabilities for large infrastructure projects, and the combined resources will support further growth in an expanding North American civil market. The transaction will provide meaningful annual synergies of 30 to 40 million U.S. dollars focused on procurement, shared services, and a centralization of a wide range of corporate functions. This value accretive proposition will result in Hoekty holding a 38.2% equity consolidated stake in the new business. Let me continue by providing you with an overview from a sector perspective. One of the fastest growing areas globally is the data center market, fueled by the rapid expansion in cloud computing and the exponential growth of AI. In the U.S., this market continues its unprecedented growth, from $82 billion in 2023 to a forecast of $128 billion in 2019. The European market is on track to rapidly expanding or increasing its size by over 40% to 55 billion by 2029. And Asia-Pacific is expected to be the fastest growing data center market in the next five years with a strong demand in highly populated countries which have low penetration rates. We have identified a pipeline of projects worth 120 billion U.S. dollars in the Central Asia and Southeast Asia region alone. Octave directly and through our companies has achieved a strong position globally. Turner continues to grow its strong position in North American market with new data centers orders of 5.3 billion U.S. dollars booked during the first nine months of the year versus 2 billion U.S. dollars in the first nine months of 23. The company's period and data center backlog has almost doubled year-on-year to 6.7 billion US dollars. And earlier this week, it announced it had been selected for a 2 billion data center expansion project in Ohio, which will provide a secure and reliable infrastructure for cloud technologies and AI. Euro Turner is assessing an addressable pipeline of advanced tech projects worth over 20 billion euros. big part of it in data centers, which complements this fatigue acquisition of Dornan and lays the foundation for the company's expansion in the European market. Octave, by Asimic, it's also well positioned in the Asia-Pacific digital infrastructure market. During the third quarter, the company was awarded data center contracts in Malaysia, India, and Melbourne, and has completed or is delivering work in Hong Kong, Indonesia, Macau, and the Philippines. In the first nine months of 24, we have taken significant steps to deploy equity in the data center market. In the Asia-Pac region, CIMIC is adapting an integrated and coordinated approach to data centers, aligned with the group's approach. Pacific Partnerships is leading the data center development strategy in the region, which is focused on achieving attractive returns by harnessing group companies' experience and expertise. And in Europe, Hochtief PVPs announced in September an agreement to establish the sustainable cloud provider business, Jorison, with a leading German server and storage systems manufacturer. The company plans to build a cloud computing infrastructure based on a network of sustainable, locally integrated data centers in Europe. The first of the JECSHA series data centers with Jorison equipment will open near Essen, Germany, in summer 2025. The land for two more of these data centers has already been secured, and more sites will be acquired by the end of the year, with further locations planned for 2025. The group is also advancing in the semiconductor space, where strong demand for AI chips is boosting investment levels, and global sector sales are expected to exceed $600 billion in 2024, rising towards $700 billion in 2025. Together, the reshoring trend, this is driving a rapid increase in semiconductor-related construction work. This is a strategic growth market for HoCTIF, where we see important opportunities and are actively analyzing a very sizable pipeline of potential projects. All of these are confidential in nature, but let me provide some color and mention three recent project awards. In the U.S., Turner was last month awarded a significant construction contract for the expansion of an assembly and test facility for cheap lithography machines. In Malaysia, we're working with Turner on an important semiconductor fab project. And in Europe, we're also active in this sector with Hoek Tief, winning an important contract for a semiconductor-related construction facility in Germany using clean room technologies. COCTIV is also supporting a build-out of infrastructure for the global energy transition. For example, Australia's green energy transition continues to provide the group with enormous opportunities. Federal government targets include reducing emissions by 43% by 2030 and achieving net zero by 2050, requiring a massive investment in renewable energy generation capacity by more than nine times what exists today. UGL is playing a central role in the delivery of the country's environmental ambitions through the construction and connection of renewable energy assets, as well as via design, construction, and connection of the high-voltage electricity infrastructure to connect those renewable assets to the national grid. During the third quarter, the company was selected to the project or the phase two of the 270-megawatt Western Downs battery in Queensland for NEON. In Queensland, the Copper String 2032 project to deliver 840 kilometres of new high-voltage transmission lines in the state is advancing and broke ground in July 24. Copper String is the most significant investment in economic infrastructure in northern Queensland in generations, worth potentially several billions, and will unlock affordable renewable energy for the region and support thousands of jobs. And on the equity investment front, our infrastructure development company, Pacific, acquired the development right for the 700-megawatt Kabura solar farm and associated the large-scale battery energy storage system in New South Wales, which will be one of the largest solar farms in Australia. Pacific will develop, invest equity in, deliver, and operate the solar farm and base, on a 3,000-hectare site with UGL carrying out the initial works, developing the project solution, and providing operation maintenance services upon completion. CUCTIV continues to deliver important social infrastructure projects around the globe. In healthcare, a semi-group company joint venture has been selected by the Hong Kong Hospital Authority to undertake the 4.3 billion North District Hospital Expansion Project, This project, which will generate revenue of up to 2.4 billion Aussie for light and Asia, will elevate the health infrastructure in the North District of Hong Kong and provide around 1,500 additional hospital beds. New orders in the healthcare sector have increased by 70% at Turner in the first nine months of 2024. Recently, for example, a Turner joint venture celebrated the groundbreaking of the 2.2 billion US dollars Henry Ford Hospital Expansion Project. the single largest healthcare investment in Detroit history. A new 1.2 million square foot hospital facility will feature a 20-floor patient tower and an expanded emergency department. In airport infrastructure, which is a sector that we're seeing strong growth in our key markets, in Australia, for example, CIMI continues to do work for the Western Tenure Airport. In October, the company was awarded its fourth construction package for this landmark project, which includes warehousing, aircraft approach, and taxiways to connect the main runways and the city infrastructure. The facility is designed to be scalable and will further expand it and demand increases in the future. And the North American market sector estimates suggesting potential capital needs of over $150 billion over the next five years. New orders year-to-date in this market Turner are three times the level of the corresponding 2023 period. For instance, in San Francisco, a Turner joint venture has announced the groundbreaking of the Terminal 3 West Modernization Project at the San Francisco International Airport. Turner will lead a $2.6 billion transformation of the terminal, which will result in a modern world-class facility. When it comes to sports stadiums, Turner maintains a leading position. During Q3, the company celebrated the opening of the $2 billion Intuit Dome in LA, along with its JD partner AECOM Hunt and the Los Angeles Clippers. The 17,700-seat arena features five basketball courts, including the NBA Clippers Home Court, the Training Center, and Outdoor Plaza for Gathering. Rooftop solar panels and battery storage will help to operate carbon-free. Hochtief has been a leader in the civil works and building sector for several decades. Let me mention a couple of recent project wins. CIMIC has been selected by both the federal and local South Australian governments to deliver the Tram Grid Separation Project in Adelaide. The project is designed to improve safety, efficiency, and the reliability of transport, and is also made at boosting connectivity and convenience for them in the region. In Austria, a Hochtief consortium won a €50 million railway project in Austria to extend a €3.6 million section of an important regional transport connection. And in California, Flatiron has secured the Heritage Road Bridge project to replace a river bridge crossing and deliver road widening improvements worth around 50 million US. During the period, the group also advanced in its more traditional VPs with 100 million Aussie equity invested by Pacific in its existing assets. These include the Cross River Rail project, where in September the first train used one of the newly built twin tunnels to arrive at the new underground stations. An important milestone as the project moves into its final testing and commissioning phase. And the group has also recorded other important PAP project awards during the period, including during the third quarter. In Europe, the DATS A15 highway project, where a Hochtief consortium was preferred, has got their go-ahead from local authorities. The PEP project, with a total investment of over €1 billion, is intended to reduce traffic congestion and will improve the transport links between Rotterdam and Germany. In the UK, Hochtief PEPs was awarded a Q3 2024 multi-million euro PEP contract to design, build, finance, and operate a new student village for Staffordshire University, as well as a transport infrastructure operation maintenance contract for a 12-year period in Scotland worth at least 190 million euros. Critical metals are central to the carbonization megatrend, and Hoctiv is developing its strategic position to offer attractive value propositions to clients. In July, Our natural resources company was awarded a $205 million Canadian three-year full-service mining contract in Ontario, Canada. The site was last mined in 2017 and is ramping back up in response to the world's increasing demand for critical minerals needed to transition to zero emissions. The work will help Canada's nickel and copper industry to provide metals that are vital to North America's transition to clean energy. And during the second quarter, this completed acquisition of underground metal business, Piper, one of the largest underground hard rock mining contractors in Australia, with a strong position in critical minerals and metals, including copper, gold, and nickel. Another key element to support the global energy transition is lithium. We're currently assessing a number of potential lithium investments opportunities with feasibility studies being carried out for some European projects. So far this year, we have been awarded a number of contracts, including a hard rock lithium contract in Portugal and a similar project in Brazil. And in Canada, we helped complete the pre-feasibility studies at the Clearwater Lithium Project in Alberta. Furthermore, we have been engaged in a validation early work space as the EPCM for a lithium extraction plant in Germany. Let me briefly update you on Abertis, which continues to deliver on its growth strategy of investing in assets to extend its portfolio duration. Via its subsidiary Valles Chile, the company won in August an international tender launched by the Chile's Ministry of Public Works for the Rutacincos and the Olos Vilos motorway. the 223-kilometer-long infrastructure links the capital, Santiago, with the coast, connecting two sporadic regions that account for more than half of the country's GDP. The concession has a maximum duration of 30 years and does not require an upfront payment. Abertis has committed to investments of around 1 billion euros within the next seven years to expand infrastructure's capacity and provide innovative technological services to users. In September, A purchase of Sierra Autopista Central was commissioned for a €370 million investment to expand the capacity of a toll road to the north of the capital, Sandel, which will be compensated for by a 25-month extension to the Autopista Central concession contract. As you know, ESG remains a long-standing priority for the group. Cocteau has been listed in Dow Jones Sustainability Index for 18 consecutive years. And last year, MSCI upgraded its ESG rating for the Cocteau to AAA from AA, making it the highest rated among its peers with an improved safety performance, seated as one of the drivers of the upgrade. So let me briefly summarize. The nine-month results show a solid performance with 12% growth in operational net profit and increasing net operating revenues. We're achieving strong orderable growth of 18% in the last 12 months, with particularly significant increases in areas including data centers and healthcare projects. And we're also advancing in the strategic shift to invest equity in our strategic growth market. We're delivering on our strategy at a local, regional, and group level. Looking forward, we anticipate a good final quarter of the year with a strong cash generation And our current expectation is to end up towards the top end of 24 guidance of operational net profit of 660 to 610 million euros. So thank you now, and let's move on to the Q&A.

Operator, we're ready for questions, please.

Yes, we will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the touchtone telephone. You will hear a tone to confirm that you have entered a queue. If you wish to remove yourself from the question queue, you may press star and two. Questions on the phone are requested. Use only handsets while asking a question. Anyone with a question may press star and one at this time. Our first question comes from Graham Hunt from Jefferies. Please go ahead.

Yeah, thanks very much. I've got three questions i think um first question just on the u.s election outcome any thoughts on the any impact on your business there that's question one question two just on data center demand huge order intake which you point to this year year to date how should we think about and and you reference unprecedented demand are you seeing already what the order intake cadence could be like in 2025, or would you anticipate more of a quieter year on intake and more running down the orders that you've won? Just trying to think about how we should think about the order book and the revenue profile kind of going into next year, given how strong 2024 has been. And then third question, maybe a bit more just technical on the Abertus SH288 impairment. Were there any offsetting impacts in there? I think it was about 82 million for hock teeth level. that offset the overall impairment that you put against the SH-288? Just the moving parts, that would be helpful.

Thank you. Thank you, Graham. So let me start with the US elections. I mean, the reality is that the focus on infrastructure is very important, right, for the new president, as it was for the other candidates. different areas because obviously Kamala Harris was very oriented into renewables and hydrogen while President Trump is more oriented into data transformation tech and another infrastructure. But the reality is that President Trump believes in ensuring essential industrial services in everything that has to do with high tech and And we are very comfortable with the prospects in this area. So from our perspective, we still believe that there's going to be a strong performance, as it was during the previous President Trump election and the last years. So no, from our side, we were very positive. On the data center front, I mean, so we have in the first nine months an order book of 6.7 billion. You start just for Turner. And then we do have for CIMIC a very important amount as well. And growing significantly. I mean, what we're going to see in the case of data center expansions in Asia Pacific and Australia and Europe is unprecedented. So get into some details about what I mean with that. The market in the US, and now I'm going to talk about the US, it was like 82 billion in 2023. And we do have a forecast of 128 billion by 29. And that's going to be pretty much annual increase every year. But the European market is also on track to expand. Because it's growing by 40% from now to 2029. And I think we will achieve a $55 billion market in 2029. And in Asia-Pacific, it's probably the fastest growing market during the next five years. And right now, there's very low penetration rates in most of the regions. There's a pipeline, an addressable pipeline by us of $120 billion in the regions. And bear in mind that so far, we've been able to build and we have experience in data centers from India to Hong Kong, including Philippines, including Indonesia, Malaysia, Macau. We are very, very strong in the region. But what we're seeing is something that we hadn't seen in Australia, which was the rise of data centers. I mean, we have a very important pipeline as well. I mean, data centers, we continue to see a very, very strong demand. We believe that that's going to continue growing from our current backlog. And I mentioned before the Turner one, but the global one is around 7.2 billion, our backlog, up 64% year on year. We have new orders in the period of 5.8 billion, up 124%, but we do have an addressable pipeline just for the next year of like 50 billion. So that's a very, very impressive market. What we have saw this year is a slowdown in the battery fabs, basically because a lot of the producers, they want to see some of the changes in technology and some of the price are post, but some of those tenders will start growing again. So that's an upside that we're gonna be seeing in the next years. And then the semiconductor market, which I mentioned during my speech, we have already been awarded three projects, and that's going to be a very important market for us moving forward. So we're optimistic about the future. The other thing, and I'm not going to... to talk today about it because we're still developing the strategy, but eventually we'll organize a special day just on our strategy about data centers for an equity perspective and development. And that will be throughout the next months because we are also seeing a very, very, very potentially important project for us as a developer in that space. But I prefer to finalize this strategy and the acquisition that we're going through in terms of land and energy points, et cetera, before we communicate the details. But we are working in a very important manner in our strategy of developing data centers in the U.S., in Europe, in South America, and in Asia-Pacific. And we do have a significant land banking so far achieved. The third one was about Abertis. So the impact of Abertis to us was 83 million, which is pretty much equivalent to the 20% of HoCTIV holds on Abertis. If you remember, the loss after tax that was communicated by Abertis was 418 million euros, and that was net of other positive results. And 20% of that, which is the 83 million, came to Hochtief. And basically, HOCTIV has offset those 83 million by other positive one-offs. So that's in particular to the 288.

Got it. Thanks, Juan. That was very helpful. Thank you.

The next question comes from Luis Prieto from Kepler Chevrolet. Please go ahead.

Good afternoon, Juan and rest of the team. Thanks a lot for taking the time to help us with today's call. I had a couple of questions very quickly. The first one, as you just have commented, a key building block of your growth strategy, and we talked about this in the April CMD, is the equity deployment opportunity in your Turner growth vectors. Could you please give us a rough idea of the number and economic magnitude of projects requiring equity commitments on your part in 2025 alone? Will that be mainly data centers only, or are there any other segments that could require equity next year? And then my second question is if you could also please update us on the timing of the Flatiron-Drogados merger and the timeframe for the achievement of the full synergies that you've been mentioning.

Thank you. Thank you. Thank you, Luis. Okay, so on the equity. I get back to the Capital Markets Day that we run at the beginning of the year. And if you remember, there were several topics. Data centers. Well, first, traditional. Second, data centers. Third, energy. And then, fourth, sustainable mobility. And then there were two. One was hydrogen and the other was critical metals that we didn't give a lot of detail. And those are under analysis. Obviously, the two that we believe in the short term that are going to be very important, one is the traditional one, Georgia in North America. And manned lanes is a very important part. There's a pipeline of $25 billion. We spent in Manitoulin in North America. Georgia is probably the biggest opportunity as a state with Manitoulin's program way larger than the Texas one a few years ago. And obviously by winning the 400, we are very well positioned for the future.

Okay.

And obviously through a merger of Charles Flatiron, so that it's going to be built by both HoCTIV and ACS, that job, right? But there's a big pipeline in that sense. Then we move into data center. And data centers... requires uh where we are landing it requires a one day uh probably and we will ask everyone to join in in a few months for a specific analysis of where we are because we we are right now uh looking approximately at potential opportunities for for five gigawatts And that doesn't mean that the 5 gigawatts, we are, I mean, that's under analysis, that's under negotiations. And obviously, but of the 5 gigawatts, we might have close to 1 gigawatt already with land and a path for permitting on the energy, right? So just looking at the numbers, that by itself is obviously very important. So there's a very specific equity strategy around data centers and very important because obviously when you look at the transactions, you go to Naviax or you go to AirTrunk, which was sold by Macquarie to Blackstone, or you see some of the volume. When you compare these numbers with some of those platforms, I mean, you realize the magnitude of what we're being able to develop. But again, that will require a specific data to to explain what we're doing in that area. Then we do have the energy. The energy is pretty much, our energy strategy is accompanying or supporting our growth strategy in some of the areas that we are developing, like data centers, or like battery storage, or some of the renewable specific projects more in Australia and in the US, right? And there's also specific in that area. And then we do have a lot of opportunities that are still under assessment because we haven't landed on anything yet on the critical metals and hydrogen. And let's put them on hold until we don't see a clear path with those we want. So you're right. I mean, one of the key things that we keep analyzing almost on a daily basis is the capital allocation and the swatting of uses and sources of funds, right? And the firepower that we have. So we do have a recurrent financial firepower driven by, obviously, the net operating cash flow that we have that is available. And that's obviously considering the shareholder remuneration and investments, which for us are very important. So at the nine months of 2024, for Hoxha, this was 1.3 billion euros in the last 12 months, right? And this is before a 331 million dividend. So you need to net off that. Also, we do have the leverage of the balance sheet. And also we need to take into account that a lot of what I'm saying is greenfield. So there's a profit coming out of the construction that offsets a big part of the equity needs from a cash flow perspective in our projects, right? So it's a very important element, which all of these are greenfield projects, right? So they're not as... capital intensive as a brownfield, which we would be talking about huge figures, and it's not the case. So yes, it's a very important strategy that we have, a very important strategy for HoCTIF, and a very important part of our future. because we want to make sure that we generate stable and recurrent EBITDAs coming from assets. This was also always our strategy, right? Starting with the risk in our balance sheet, continuing with diversifying our construction capabilities and engineering, and then all of that driving to holding assets that we were able to develop. And then, sorry for the long answer, but it's a very important one and requires a specific analysis when the time comes, right? And we will go sector by sector. Then on Flatiron that you were asking, so it will be closed in January. We're expecting, as I mentioned in the speech, important synergies on cost, but potentially in revenues as well. It's a very good question. When will we start? Because we're trying, obviously, to make sure that we understand the restructuring cost. And obviously, we are provisioning for all of those. And most likely, 100% of that, we will see during 2026. And we will start seeing in 2025 important changes effects of that integration and synergies, but the full ones won't happen until 2026 because the closing is in January 25.

And Juan, if I may, a follow-up question. Thanks for those two answers. But the 25 billion euro opportunity managed lanes that you mentioned, is that equity or full project value of the pipeline?

That's project.

Project overall.

Okay. Thank you. On a greenfield basis, right? I mean, the investment.

Understood.

The next question comes from Dario Maglione from BNP Paribas. Please go ahead.

Hi, Juan. Hi, everyone. Let's say three questions for me. One on Abertis. uh could you give us an update on the discussion with the french government around the snf concession um then a second question uh on data center strategy uh i mean there are lots of companies that claim you know they are involved in building data centers but not many can build the two billion data centers that you just won uh so i i was wondering like what competitors uh do you respect most in the us for building data centers and what advantage that internal has against those competitors um and maybe last question uh be more technical if in slide 22 of the presentation uh you have um the impact of the t-sub um option on the balance sheet of active can you maybe work us through this impact and I guess the same impact on ACS.

Thank you.

Okay, so let me start with the first one. Abertis, French government. So there are two things. One is the infrastructure tax and the other one is potentially the extension of the project. So, I mean, in our nine months 2024 figures, the French transport tax is fully reflected. And this was following the decision by the French Constitutional Court in relation to the constitutionality of the transport infrastructure tax. So that will, I mean, that will follow its path because we will protect our rights based on the Article 32 of the Constitutional Agreement. which is the right to be fully compensated. But we are not relying on that. I mean, we are fully reflected in our balance sheet. We're not, I mean, we're assuming that that impact is fully impacting us and it's reflected. Again, but we will, no matter what, continue to pursue our rights. In the case of the extension, we have no news. I mean, it's a decision of the French government. We know as much as you know. The decision, I believe, that will be taken close to 31, 2031, 2032. I mean, not so much time in advance. And anything can happen. They can extend, they can retender, or they can decide anything different. So no news in that sense. I believe we need to wait more to the end of the concession before we have more clarity around that. The data center. I mean, the data center, we, I mean, two years ago when we started talking about our SWATI on data centers, we were very clear on one thing, which was our strength because of our geographical presence. And at the end of the day, it's very important for a lot of the hyperscalers and platforms in data centers to be able to rely on a contractor that can be very strong on delivery, right? Especially the time to market, which is key in data centers. And But also in someone, because the engineering of these data centers are becoming more and more and more complex, as you rightly said, you move into the high and the very big ones. And those projects, the larger it gets, the more complex it gets, not just from the pretty much the refrigeration, but also from the energy, etc., And that engineering, what we're seeing is that all the hyperscares, they do not want to start talking to 500 different contractors because there's a lot of IP around some of those. So they prefer to be able to rely on someone that can deliver in multiple regions. And that's one of our biggest strengths. As I mentioned before, We are global leaders according to all the rankings on a global basis when it comes to data centers. But specifically, we are the number one in the U.S. with that, which is not done. And we are a very important player in Europe as well. But in Asia Pacific, from India to Hong Kong and in Australia, we are the leaders. And as this gets more complex and larger, I believe that will give us a further competitive advantage because reliance and reliability is very important. So honestly... Our competition is very local. I would need to go region by region. We are not seeing any other large contractor competing with us in all the areas. We're seeing regional contractors competing In Spain, against certain, Germany against other ones, in the UK, in Ireland against other ones, New Orleans against different ones, US different ones, and then Indonesia, Philippines, Macau, India, Malaysia, Hong Kong, different ones, and in Australia, again, different ones, right? So it's very regional. And that's another advantage when it comes to large ones, because the original contractors up to now, I would like to see them how they are going to move into the two, three, four billion project, some of them. So, I mean, I've been the last two years being bullish about our Spratian data centers and I continue being. I think we offer a very important competitive advantage in this sector. And then on this, so this, I mean, I guess you were asking about how the put option was reflected in the balance sheet, right? Yeah, so pretty much the decline in equity on the balance sheet, I think that it goes from 1.27 billion euros, and that was at year end, to 853 million at the nine months of 2024. And this is pure accounting. And this is because of the first time consideration of this. So the first time consideration of this requires that we account for Elliot's put option as a liability on the balance sheet. So the resulting potential liability of almost 670 million euros is booked against the equity and explains all of that decline in the book value of the equity. Without that, that equity impact on the balance sheet would have shown a strong increase.

Okay, thank you. Thank you, everyone.

The next question comes from Augustin Sandro from Stifel. Please go ahead.

Yes, good afternoon, and thank you for taking my questions. I've got three, if I may. I'd like to make a follow-up on the US election results and your thoughts and implications in the region. I mean, you mentioned that there is also an important focus on infrastructure from Trump versus Harris. But it seems to me like you're quite exposed to batteries and generally energy transition activities. So I'm kind of wondering how easy it would be for you to shift from this current area of infrastructure to a new area of infrastructure and generally your thoughts on that. Also maybe any thoughts in terms of tax implications at this stage. My second question would be concerning your Asia Pacific region. In H1, you took some provisions. I was wondering if you could elaborate on the risk from your legacy contract in Asia-Pacific, and which contract specifically do you still see risk in? I know we previously mentioned the New Adelaide Royal Hospital. Any other one to mention in there? And I was wondering if you could share the current ACS share. Thank you very much.

Okay.

So let me start with the U.S. Our order backlog for Turner in the U.S. in the battery space is $1 billion, which is down 47% versus last year. So we were already seeing a slowdown in North American market. Now, the slowdown that we're seeing was more because what I explained before on technology, okay? Not so much on a different trend because of elections. The projected EV total market share was already trending down, right? So the 9% projected market growth versus a previous 12%. And this is also due to increased competition of plug-in hybrid electrical vehicles and slower EV adoption by the market, which by the way, it's also happening in Europe. So the reality is in our forecast, battery market is a potential upside. It's not in our current business case. for different reasons than the US elections, right? But that was already there, right? And we had to wait to see, but it was not in our business plan. It was not contemplated because there was a lot of uncertainty on demand of electric vehicles on one hand, and on the other hand, because of a lot of uncertainty about the technology. So now the US election comes and you want another layer of complexity for that, that could delay potentially that upside in the US. However, We still see upside in Asia-Pacific, Australia, and Europe. In Europe, probably for the battery storage. I mean, energy storage more than EVs in the short term. But in Australia, for example, we do have close to 2.5 gigawatts of battery storage projects where we are also developers. And that's attached to the energy. So anyway, it wasn't upside in any case. We're not relying on that in the business plan. It's nice to have if the market continues, but you're right. I mean, it's going to be affected by the US elections, especially in the US. Same thing, hydrogen. Hydrogen was not in our business plan. We're participating in five plants in Australia from a construction perspective, but we're not relying on a lot besides that. We're expecting more of that as a kind of an upside in Europe. And it could have been an upside in the US, certainly not now. But I mean, again, it was an upside. It was never in our business plan, neither on the equity, neither on the construction. And renewables was not part of our business plan, either in the US, yes, in Australia, because there's a lot to do in Australia, and we believe that there's going to be a lot, and yes, associated to our data center strategy in Europe or in South America. On the other side, there's a big investment coming on the traditional front, traditional sector in the U.S. There's a lot of investment in unshoring, industrial unshoring. There's a lot of investment in semiconductors, and there's going to be a lot of investments in data centers, even above from our previous figures. Again, that's an upside. So that's more or less, in summary, the way we see the potential impacts in the U.S. Then on the legacies, we – I mean, as you saw, we have used – we are using some of the – I mean, the capital gain that we got, non-cash capital gain from this as a result of the full consolidation of this in the first half of 2020. And this was because of the re-measuring of the fair market value of the CIMICs existing to the percent at this stake. Against that, we reassessed some, I mean, CIMIC had reassessed legal C positions, and that was with a view to accelerate cash collections. I will give you a few examples of that. So there was a non-cash project with provision of €447 million. After tax, that was booked, okay? And it was related to completed legacy projects. Now, which ones? So I'll give you a couple of examples. In Latin Asia, from back 2013, 2014, there were a lot of projects in arbitration or mediation that would continue being in our five years in arbitration, so very long term. with balance sheet positions, like I'm referring to probably like the passenger clearance billing in Hong Kong, or some of the price associated to the airport in Hong Kong, that we have taken the offer to go to the client saying, why don't we settle? And the client accept it, so we've been able to settle. But against that, other projects like the Transmission Galley in New Zealand, we offer paying them to pretty much finish a project, including long-term guarantees on the one end, because we thought that it was a very good idea and that was cash out and also position the balance sheet. So we have been reassessing some of those jobs, very old jobs. I mean, you need to go back to 2011 for transmission galley and that. And I mean, if we had the state, it is nothing. I mean, we would have continued arbitrations in the long term or we have continued the project. I mean, but we thought that it was a good opportunity. And in the case of the ACS participation in co-actives, 76.6% or 79.1% when adjusting for treasury shares as of the end of June 2024. Thank you very much.

The next question comes from Miguel Gonzalez from JP Capital. Please go ahead.

Mr. Gonzalez, your line is open. You may proceed with your question. We are not able to hear you. Gentlemen, I hand back over the conference to you for any closing remarks.

Okay, so thank you so much. As always, please feel free to follow up on any question to us or any questions. We'll be more than happy. to answer them. And I look forward to seeing you in some of the conversations we'll have during the next months on some of the topics we've been discussing. Thank you so much. Bye now.