Published on 03/25/2020

On business and financial situation

Pursuant to article 227 of the Consolidated Text of the Spanish Securities Market Act (Texto Refundido de la Ley del Mercado de Valores), FERROVIAL, S.A. (“Ferrovial”), reports on the following:

OTHER RELEVANT INFORMATION

Madrid, 25 March 2020

In the current scenario caused by the Covid 19 pandemic, Ferrovial is delivering critical services maintaining hospitals, operating ambulances; handling emergency call centres; setting up quarantine centres and new hospital beds; operating critical transportation infrastructure, and cleaning and maintaining cities. Our R&D+I department has helped develop a website and an App to support potential positive cases, as well as with the crafting of breathing devices and making of protection equipment with 3D printing.

It is our priority to maintain the safety of the workplace and to protect the health of employees and clients in line with the WHO guidelines. Measures taken include work flexibility, remote working, travel freeze and providing appropriate protection equipment for the employees who require it.

Ferrovial faces the current macroeconomic situation with record high liquidity. As of December 2019, ex-infrastructure projects, liquidity stood at EUR6bn, including available liquidity lines in amount of EUR1bn at ex-infrastructure level. Net cash position ex-infrastructure stood at EUR1.6bn as of end 2019 (including discontinued operations).

As reported in our FY 2019 results, maturities in 2020 reach EUR1,017mn (including EUR973mn of European Commercial Paper), and EUR748mn in 2021, comfortably covered by our current cash position. Liquidity at project level amounted to EUR1.23bn. Current levels of liquidity are close to the year-end levels. Regular updates will be provided every quarter in the results release.

Operationally, the Covid 19 pandemic has started to show its impact on Ferrovial’s activities, with a different degree depending on the business line:

In Toll Roads, following a strong start to 2020, traffic levels have begun to suffer as confinement measures extend across Europe and North America. The impact is higher in light vehicles. We expect traffic to remain subdued while the current situation remains. However, our main toll roads (407 ETR & Managed Lanes) enjoy a strong financial position and enough liquidity to service all their debt obligations for 2020.

• 407 ETR traffic grew by +1.1% in the first two months of 2020, to then fall by -13% in March up to the 22^nd. Traffic decline has accelerated as the different measures are applied and the latest data available, on Monday 23^rd March, shows -66% compared to the same Monday of the previous year. Commercial traffic is falling less than the rest.

The 407 ETR does not have financial covenants, but there is a dividend lock-up ratio of 1.35x DSCR. The asset is in good shape to service its debt for 2020 (CAD430mn debt service vs. c.CAD1.5bn available liquidity). The 407 ETR has distributed CAD312.5mn in dividends in 1Q 2020. The coming dividends will be decided by the Board on a quarterly basis.

• The Texas Managed Lanes have also seen traffic fall following the recommendation for people to remain home. During January and February, traffic in NTE grew +5%, +11% in LBJ and +24% in NTE 35W, with revenue growing +17%, +16% and +56% respectively. During March (until the 22^nd), traffic fell -17% in NTE, -12% in LBJ and -8% in NTE 35W, with commercial traffic more resilient than light traffic. The rate of decline has accelerated recently to around 60% year on year.

The Managed Lanes do not have financial covenants in their debt, but dividend lock-ups at 1.2x DSCR. These entities maintain reserves accounts for the next year debt service and have additional liquidity facilities.

• LBJ has been accumulating cash since it started operations 5 years ago and is in very good shape to face its debt service (cash and reserve accounts cover debt service by close to 4 times), as well as paying its first dividend. Timing and size of its first dividend will be decided by LBJ Board during the year.
• NTE should be able to service its debt comfortably, even though the asset distributed an important part of its accumulated cash last year (available liquidity to cover the debt by close to 4x). The level of dividends in 2020 could be impacted by operating performance.
• The NTE 35W has available cash and reserve accounts that cover debt service by over 6 times.
• The I77 holds liquidity well above the debt service for the year (over 4 times).

In summary we don’t expect financial stress on debt service for these projects. Dividends will be decided as the situation evolves.

Ferrovial’s UK airport business has also been strongly impacted by the Covid 19.

• Heathrow airport issued a statement last March 20^th explaining both the operating and liquidity situation of the airport. Heathrow will reorganise, shrink and remain open throughout this crisis: enabling some passenger services & safeguarding vital cargo supply lines for the UK. Financial performance will be significantly impacted. Among the immediate actions to be taken by the airport we will see a reduction in Opex and executive pay, freezing of recruitment and a review of capital projects. Heathrow has kept prudent headroom in credit metrics and ample liquidity with cash and committed facilities available of £3.3bn designed to maintain at least a 12-month liquidity horizon under the current circumstances.

• Aberdeen, Glasgow and Southampton airports (AGS) have already seen a strong impact in their traffic levels, with passenger figures materially reducing since the beginning of the year and versus last year. There are no dividends expected from these airports during 2020. Debt is a bank facility with standard financial covenants.

In Construction and Services, we are reorganising work while fulfilling all Health and Safety requirements. In some cases, work has been halted and contracts suspended, depending on the local situation.

• Construction could see widespread slowdowns or stoppage in the projects. The vast majority of our contracts include Force Majeure clauses, which implies no penalties faced in the event of delays or execution suspension, and that part of the costs will be recovered. Governments are putting in place flexibility measures that will allow for cost reduction in the projects impacted by the current crisis. Until all the measures are fully defined by each government, it will be difficult to estimate financial impacts.
• As for our Services business, we remain committed to the full divestment of the business although we expect delays in the process given the macroeconomic uncertainty, except for the closing of the Broadspectrum sale that is expected to close before the end of Q3.

We carry on with the long-term initiatives outlined in our “Horizon 24” plan. A new operating model will help to achieve cost reductions of EUR50mn per year.

Finally, as announced in February, the shareholder remuneration has been proposed to the Annual General Meeting (AGM), next 17th of April 2020, for its approval. If approved, its final execution, timing and size, will be decided by the Board considering the evolution of the Covid-19 impact on the business.

We will be updating the market again at the abovementioned AGM. In the meantime, and despite the uncertainty of the current situation, we find support in our strong financial position and, above all, a team that demonstrates daily the value of this company and the role it plays in society.

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English translation for information purposes only. In the event of discrepancies between the English and the Spanish version, the Spanish version shall prevail.