OHL Business Plan 2020 is focused on Construction and Concession development

The two most remarkable events in the first months of 2018 have been the closing of the transaction for sale and transfer of 100% of share capital of OHL Concesiones to IFM and together with this the approval by the Board of Directors of the Company of a new Business Plan for 2020.

The OHL Concesiones sale is a landmark transaction for the OHL Group, as it will enable the cancellation of its Gross Recourse Debt and will place it in an excellent cash situation.

The OHL Business Plan is based on:

• Focus on three geographic areas: US, LatAm and Europe.
• Reduction of the business activities of the company to focus on Construction and Concession Development.
• Heavy overhead costs reduction to meet these new needs.
• Financial situation with net indebtedness less than zero at the end of the year starting, after the OHL Concesiones sale and after the execution of the Put Option by the bondholders, with gross recourse debt pro-forma of 678.5 million euros and 1,465.8 million euros of cash, resulting in a net cash position of 787.3 million euros.
• Reserves of value based on assets of the company not linked to the main business activities of Construction and Concessions Development.

Adjustment to this new Business Plan from the current situation will be gradual in the 2018-2020 triennium, which will necessarily have an impact on the P&L statement until the completion of the implementation of the plan, to become a smaller company but more profitable.

This makes that the comparison of consolidated figures with those of the same period of last year should be interpreted in the framework of this new approach established by the company. Therefore it will become normal to see a decrease in sales and an impact of costs associated to the adjustment to this new Business Plan, as well as additional divestments in the minor assets of the company to finance this adjustment plan.

Result of the first quarter

On the operating level, although the key figures of the Group have undergone until March of 2018 change in scale on presenting Concessions as a discontinued operation, in comparable terms they are in line with the first quarter of 2017.

The Profit and Loss Account for the first quarter of 2018 shows a Sales figure of 712.5 million euros, representing a decline of 7.9% with respect to the same period in the previous year, affected principally by a slower pace of activity in the Construction and Industrial divisions and the smaller contribution by the Mayakoba companies. The sale of the minority stakes in the hotel companies and part of the land of the Mayakoba complex was completed on 26 April at the price of 51.3 million euros.

The Attributable Net Profit was placed at -144.9 million euros, very adversely affected by:

• The change in value of the exchange rate hedges contracted in relation to the sale of OHL Concesiones and which have not involved cash outflows for the company as yet. The impact of these hedges on the Attributable Net Profit totals -70.4 million euros.
• The devaluation of the currencies in which the Group operates against the euro, principally the Canadian dollar and the Mexican peso, totalling -41.1 million euros.
• The unfavourable outcome of the claim filed by OHL Industrial in relation to the Xacbal Delta Hydropower Plant project, which has had an impact on Attributable Net Profit amounting to -28.8 million euros.

If these impacts totalling -140.3 million euros are excluded, the Attributable Net Profit would be placed at -4.6 million euros. 

EBITDA totalled -36.4 million euros, affected by the unfavourable outcome of the aforementioned claim filed by OHL Industrial with the International Chamber of Commerce (ICC) in New York, with a negative impact of 27.6 million euros. Excluding this effect, the EBITDA figure would be placed at -8.8 million euros, due mainly to the lower margins obtained by Engineering & Construction and the effect of the Mayakoba companies. 

Centred on the Construction business, the Group’s short-term order book at 31 March 2018 totalled 5.6 billion euros, equivalent to 25.5 months of sales.The order book presents a balanced profile both in terms of geographical location as well as project size, with 92.4% originating from its principal markets (where the U.S. and Latin America stand out with 37.1% and 30.1%, respectively).

Repayment of debt

With respect to the recourse bank borrowings drawn down, which totalled 714.0 million euros at 31 March 2018, is that the Company repaid debt during the month of April in an amount of 701,7 million euros after collecting the funds from the sale of OHL Concesiones.

As of 12 May 2018, the Company had received confirmation by the bondholders who have decided to exercise their Put Option for a total amount of 228.3 million euros. The settlement of the Put Option will take place on May 21st, after this the company will maintain a new outstanding amount of 666.2 million euros in bonds.