OHL ended 2017 as a year of transition following the sale of OHL Concesiones and starts a new stage focused on the construction business

The 2017 financial year represents a year of transition for the OHL Group marked by the signature of the agreement for the sale of 100% of the share capital of OHL Concesiones S.A.U. to the fund IFM Investors. As a result of this transaction, the Concessions business has been classified as a Discontinued Operation in the OHL Group’s Consolidated Annual Accounts.

This is a landmark transaction for the OHL Group, as it will enable the company to simplify and significantly reduce its Debt structure, placing it in a positive cash position and in an excellent Available Liquidity situation.

This transaction has led to a higher rating by Moody´s which, on December 1^st, 2017, raised OHL’s rating to B3 from Caa1, keeping it under review for assessing possible fresh upgrades, all of which represents support by a third party for the Group’s wise divestiture policy.

On the operating level, the key figures of the Group in 2017 have undergone a change in scale following the sale of OHL Concesiones. The signs of recovery evidenced by the Construction business stand out in terms of improvement in EBITDA, reaching 2.1% on sales in comparison to -1.6% in 2016.

The contracting capacity of the area is a key factor, totalling 2.3 billion euros in the financial year, with 64% of this amount awarded in the U.S., maintaining a healthy order book of projects diversified both in terms of size as well as by geographical area, after having narrowed down and almost eliminated the so-called legacy projects, which are developing as expected.

The regular business activity in Construction, excluding the legacy projects, has achieved positive cash generation in the course of the year, representing a turning point in the future capacity for sustainable cash generation on the level of the projects of the main business of the Group. In the fourth quarter, the excellent performance of the Construction activity generated 172 million euros in cash.

Centred on the various economic parameters, the OHL Group’s sales, excluding Concessions, totalled 3.2 billion euros, presenting a slight decline (-3.8%) with respect to the previous year due, among other aspects, to the delay in the start-up of the construction phase of a number of concession projects in Latin America. In terms of EBITDA, the figure for the year totalled -56.5 million in comparison to -576.3 million euros in 2016, affected by the lower than expected contribution to production by projects with higher margins, such as the works for concessions in Latin America or the I-405 and the Canarsie Tunnel in the U.S., losses recognised in projects in the Industrial division, losses in the Gustavo Fricke Hospital in Chile and the costs, among others, of the Collective Redundancy Procedures in Obrascón Huarte Lain, S.A. and OHL Industrial, S.L.

In comparable terms, if the effects of the last two one-off impacts mentioned above are excluded, EBITDA in 2017 improved by 76.2 million euros with respect to the figure for the previous year.

The Attributable Net Profit was placed at -12.1 million euros, compared to the losses of 432.3 million in 2016. If the effects described previously are excluded, this figure would total 64.4 million euros.

New stage

In January, the OHL Extraordinary General Shareholders’ Meeting approved the transaction for the sale of OHL Concesiones S.A.U. to IFM Investors, subject to, among other conditions, the granting of the required authorization by the Mexican competition authorities, the obtaining of other consents by financial institutions and public authorities and the approval and launch by IFM, or a subsidiary, of a takeover bid on the share capital of OHL México, S.A.B. de C.V. not owned by IFM on the date of the close of the transaction. The amount of the sale totals 2.8 billion euros, after deducting project finance, subject to the usual price adjustments in transactions of this kind. The Group estimates that, following such adjustments, the net price would be approximately 2.2 billion euros.

Following this transaction, OHL is embarking upon a new stage focussed on its Construction business, starting from a robust financial position and a simplified debt structure. The company will prioritise the risk/return ratio over growth, adopting an efficient geographical focus and reinforcing management by project and risk control mechanisms.