Ferrovial announces the classification as held for sale of its Services activities as of 31 December 2018, resulting in the recognition of a provision of €774 M due to the impairment of the value of its participation in its subsidiary Amey
Published on 02/27/2019
Changes in assets and liabilities value
According to articles 226 of the Consolidated Text of the Spanish Securities Market Act (Texto Refundido de la Ley del Mercado de Valores) and 17 of Regulation (EU) 596/2014, on Market Abuse, FERROVIAL, S.A. (the Company or Ferrovial) reports the following:
Having completed the strategic review of its Services division communicated in October 2018, Ferrovial has decided to classify as “held for sale” all of its services activities as of December 31st 2018. This decision is framed within Ferrovial’s strategy of focusing on the development of its infrastructure business. According to most analysts’ valuations, infrastructure weighs more than 80% in the sum-of-the-parts of Ferrovial.
This decision involves classifying the assets and liabilities of the Services business as a discontinued activity and accounting for them at the lower of the carrying amount and fair value less costs to sell.
The application of this fair value criteria to Amey, Ferrovial’s subsidiary that holds the UK Services division, results in the recognition of a provision of 774 million euros as a result of the impairment of the value of Ferrovial´s participation in Amey, as at the end of the 2018 fiscal year.
After giving effect to this provision, the book value of Ferrovial’s participation in Amey stands at 103 million euros.
There has been no additional provision with regards to the rest of the Services business. In fact, in some cases the fair value is substantially above book value; however you cannot compensate the impairment resulting from Amey with potential capital gains in other parts of the portfolio.
Amey’s operational performance remains unaffected and it continues to deliver high standards of service.
Amey’s fair value has been affected by the development and outlook of the UK market, which has been impacted by macroeconomic uncertainties and low public budgets. Against this backdrop, the number of contractual disputes in the market has increased significantly. In Amey´s case this has been focused on the operating service contract in the PFI with the Birmingham City Council.
Ferrovial will hold a conference call on Wednesday 27th February 2019 at 18:30 h. CET.
The details of the conference call are as follows:
- Spain (18:00h): +34 919 011 644
- UK (17:00h): +44 0203 936 2999
- USA: +1 845 709 8568
- Canada: +1 613 699 6539
- Australia: +61 028 417 2995
- All other locations: +44 203 936 2999
To access the conference call, these phone numbers must be followed by the pin code: 759040
Madrid, 27 February 2019
Santiago Ortiz Vaamonde
Secretary non-Director to the Board of Directors of Ferrovial, S.A.
English translation for information purposes only. In the event of discrepancies between the English and the Spanish version, the Spanish version shall prevail.
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