Edited Transcript of ATL.MI earnings conference call or presentation 12-Mar-21 11:00am GMT

Q4 2020 Atlantia SpA Earnings Call Rome Mar 13, 2021 (Thomson StreetEvents) — Edited Transcript of Atlantia SpA earnings conference call or presentation Friday, March 12, 2021 at 11:00:00am GMT TEXT version of Transcript ================================================================================ Corporate Participants ================================================================================ * Carlo Bertazzo Atlantia SpA – CEO, GM & Non-Independent Executive Director * Francisco José Aljaro Navarro Abertis Infraestructuras, S.A. – CEO, Acting CFO & Director * Franck Goldnadel Aeroports de Paris SA – Executive Director, Chief Airports Operations Officer & MD of Paris-Charles De Gaulle Airport * Gabriele Benedetto Atlantia SpA – CEO of TELEPASS S.p.A. * Marco Troncone Aeroporti di Roma S.p.A. – CEO * Roberto Mengucci Atlantia SpA – Executive VP & Highway Business Coordination Director * Roberto Tomasi Autostrade per l’Italia SpA – CEO, General Manager & Director * Tiziano Ceccarani Atlantia SpA – CFO ================================================================================ Conference Call Participants ================================================================================ * Elodie Rall JPMorgan Chase & Co, Research Division – Research Analyst * Enrico Bartoli Stifel Europe, Research Division – MD * José Manuel Arroyas Grupo Santander, Research Division – Equity Analyst * Marcin Karol Wojtal BofA Securities, Research Division – Analyst * Nicolò Pessina Mediobanca – Banca di credito finanziario S.p.A., Research Division – Analyst * Stefano Gamberini Equita SIM S.p.A., Research Division – Analyst ================================================================================ Presentation ——————————————————————————– Operator [1] ——————————————————————————– Good afternoon. This is the Chorus Call conference operator. Welcome, and thank you for joining the Atlantia 2020 Results and Strategic Update Presentation. (Operator Instructions) At this time, I would like to turn the conference over to Mr. Carlo Bertazzo, Chief Executive Officer of Atlantia. Please go ahead, sir. ——————————————————————————– Carlo Bertazzo, Atlantia SpA – CEO, GM & Non-Independent Executive Director [2] ——————————————————————————– Good morning to everybody. Carlo Bertazzo speaking. First of all, thank you very much for attending this annual Atlantia conference events where we have opportunity to present 2020 results and strategic — some strategic update. Here with me are the CEO of the main assets of the group for a general overview of each of them. And it is a pleasure for me to introduce them during the presentation. 2020 was a challenging and intensive year for Atlantia, not only due to the negative effect of traffic volume due to pandemic, but also because some uncertainties related to Autostrade per l’Italia concession. Despite this general favorable content, we have done and launched many important initiatives on business, financial, liquidity, organization, governance, management teams, and lastly, on the strategy, with innovation and sustainability as the engine for development in the field of mobility of people and goods. In Page 2, you can find, I don’t know, very — a nutshell business overview. I don’t like to spend, because of the — a lot of time in a single page because we have a very long presentation today and I have the pleasure that also the CEO attend the meeting. But just — I’d like to point out the size of our physical assets, that we are speaking about a portfolio of traffic assets in different 11 countries with 56 different concessions. And also we have our services provider, mobility, like Telepass that is important for our future strategy. And I’d like also to point out that before to going forward about the financial performance, we spent time during 2020, also about the new role of Atlantia as a strategic holding company. We defined new vision, new organization in Page 3, maybe a lot of you know very well this page. But in any case, we, in the last year, changed our top management of the group and also alternative level. We have defined completely the governance of the group and set up ESG, our target for 2023. Plus on top of this, we reviewed the risk management culture of the group and introduced the new enterprise risk management systems. That it is very important for us. I’m very proud also to present in Page 4 the new management of Atlantia team that I dedicate a lot of time not only for select people, but select people in different way. Diversity is important, not only in terms of agenda, but also for different experience and different agents. For the traffic and consolidated performance, economic performance, I give the floor to the CFO, Tiziano Ceccarani. ——————————————————————————– Tiziano Ceccarani, Atlantia SpA – CFO [3] ——————————————————————————– Good morning, everybody. Thank you very much, Carlo. Before entering 2020 financial results, let’s look to traffic performance. As we all experienced, 2020 traffic was significantly impacted by the COVID-19 pandemic and by, of course, the relevant government restrictions. We reported an overall reduction of 23% on our Toll Road business, and 75% on our Airport business compared to ’19 results. Toll Road proved to recover quickly as soon as governments reduced restriction to mobility. Moving to Slide #6. We have the executive summary on key financial performance. As we discussed, we — 2020 results’ mostly impacted by the pandemic and traffic restrictions. Revenues closed at EUR 8.3 billion, EUR 3.3 billion lower than ’19 and EBITDA at EUR 3.7 billion with a reduction of EUR 2 billion. COVID and traffic were responsible for over EUR 2.6 billion at the EBITDA level, which was impacted also by negative effects for FX, mostly related to the devaluation of Brazilian real and Chilean pesos on our Latin American businesses. And it was also impacted by some additional maintenance costs for the ASPI perimeter for approximately EUR 0.3 billion. All of our business quickly react in the 9 months, and we were able to reduce OpEx by over EUR 600 million, including 1 point — sorry, EUR 165 million of positive impact by reduced construction fees. As you know, since the beginning of the pandemic, we committed to report traffic performance for our — on our business on a weekly basis and to update year-end sensitivities on revenues and FFOs. So for 2021, on the basis of the recent drastic data release on March 7 and with the assumption of gradual reduction in traffic restriction, we expect to recover 90% of ’19 traffic for our Toll Road business and 30% for airports. With this assumption in mind, we expect revenues to be at EUR 9.4 billion in 2021, with FFO at EUR 3.0 billion, paving the way for a return to stronger economic and financial performance for the group. Moving to Slide #7. We — in 2020, we focused all of our efforts to improve liquidity in our businesses and at the holdco level. We increased our cash position from EUR 5.2 billion to EUR 8.4 billion and we have additional EUR 8.7 billion of committed lines available at the end of 2020 at the group level. These results were achieved, thanks to the strong relation with our investor base, which were part of the EUR 9.2 billion bond issuance since 2020 and ending at the end of February 2021, and the strong relation with financial institutional banks, which supported the group with over EUR 6.2 billion of additional banking facility. Carlo? ——————————————————————————– Carlo Bertazzo, Atlantia SpA – CEO, GM & Non-Independent Executive Director [4] ——————————————————————————– Thank you, Tiziano. We are moving to Page 7. Just the one page about the ASPI disposal process. As you maybe, all of you know very well, in 24th September, Atlantia launched a dual track process, 2 different legs. One is outright sales. The last update that we have, that we’ve received in 24 February, the binding offer for consortium CDP and the Board of Directors at the end of the month has been deemed, this offer, not consistent with the interest of Atlantia and its shareholder as a whole. In any case, if a binding offer is received as considered in the company interest, Atlantia Board of Director will call EGM, proposing the revocation of the demerger. The demerger that I remind that was approved by the shareholder in mid of January, 2 months ago. And we called the EGM at the end of this month, just to require to the shareholder an extension from — at the end of March, at the end of July, the deadline for achieving the binding offer related to the majority of share capital or ACC. For the time being, we don’t have any — our update about this kind or dual track process and we are in the negotiation phases with the CDP consortium to aim to improve the economical offer and also the time condition. I leave the floor right here to Roberto Tomasi, CEO, Autostrade per l’Italia. But before I give the floor to Roberto, I like — and I’d point out that really had a blast year in 2020. ——————————————————————————– Roberto Tomasi, Autostrade per l’Italia SpA – CEO, General Manager & Director [5] ——————————————————————————– Thank you, Carlo. Thank you to everybody. In this first chart, we have put together 2 things. One is the new vision of Autostrade per l’Italia and in the other side are the activities that we have done in the 2020 and that we have foreseen in the plan 2020-2024. Remember that the Plan 2024 is the plan equal to an economical plan that we have submitted to the government and that we are waiting the formal approval. In terms of delivery plan, we have focused to revise, completely, our maintenance plan with the definition of increase of the volume of the maintenance activities in the next 4 year of around 60% of the volume that we done in the past. The new vision of the maintenance plan is completely agreed with the Minister of Infrastructure. And together, we are defining a new standard and the new standard are not the only standard for Autostrade per l’Italia, but are the standard for the entire sector of the infrastructure in Italy. In the other side, we have completely revised our investment plan, increasing the volume of activities into in 2 box. One linked to the major project like Gronda Bypass or Bologna Bypass, and other larger improvement in the extension of part of our infrastructure. In the other side, in the other box, the new vision of the modernization of the infrastructure. And we are thinking about bridge, viaducts, tunnels and all the safety barrier in all our grid. To support this important plant, we have, as Carlos said, revised completely our process, and we have launched the transformational plan that is called 360 degrees next in order to revise all our process. In terms of our plan, our link with the new vision of the mobility, the green infrastructure specifically, the charging infrastructure that we are developing with a new company that we are set up is one of the part of our transformation, but we are working also on the design of the new infrastructure in order to be sustainable and in all the sector of the energy efficiency inside our network. In the new region, and we will see in the new chart, we have integrated completely the value of the company, starting from the research up to the engineering and construction to arrive to the manager of the services for the customer and for the operation. To go to the next slide, this is the setup of the new organization, in which we have divided the group function, taking consideration that more than 90% of the new manager or manager that comes from a different experience in order to give us the capability to support this new investment plan, and we have redefined the different business line. We started from Autostrade Tech. Autostrade Tech is a company and we are consolidating the leadership in the technological solution and innovative system. It was already under the control of Autostrade per l’Italia. We have defined a new company that is Techne. Techne is the engineering company. We have defined this company at the end of ’20 and we have closed the deal also for Pavimental. Pavimental now is controlled by Autostrade per l’Italia in order to have also the construction capability inside our group. Finally, the true business unit, the operational one and engineering construction, was redesigned internally to the organization of Autostrade per l’Italia. And finally, we have created, in order to set up the new infrastructure for the electrical infrastructure for charging the electrical machine with free to experience. Next one. These are in the numbers in terms of activities done. What I wanted to underline is that the number of inspections that we have carried out in the 2020 and the new setup of the ARGO Digital System. I remember that one of the complexity to manage the infrastructure, to have a clear idea about the infrastructure that you manage and to go deeply to this digital system. We think that we have reached the result. In terms of maintenance sector, Airport, the numbers are quite clear this year, even if we had a month of COVID and we had some impact on our operational activities. We have reached a value of more than EUR 680 million of maintenance activities that if we compare to the previous volume of maintenance, we are more than double to what’s done in the 2018. And as I told before, we have changed more than 80% of our management position inside the organization. In terms of volume, this is one of the reasons why we set up an engineering company, and we are working to reach the level of capability of numbers of people need to approach the investment plan. We are doubling, also in this case, the volume of the investment plan in the next 4 years, and we are closer to double also the level of the maintenance plan. And so in this way, we need to set up a strong organization in order to support this important effort. To do that, next slide, thank you. To do that, we have organized, internally, a complete transformation plan in order to cover all the process inside the company starting from the digital, and we will show you also some impressive numbers of activities that we are foreseeing, obviously, to focus on the people. Just to give you an idea, we are foreseeing to hire more than 2,800 people within 2024, next to excel and, say, it depends. Obviously, it’s linked to all our internal process. One of the points that we think extremely is strategic for the company is the plan for the next to knowledge and what are the agreements that we are close with the most important university in Italy, specifically with the Polytechnic of Milan and the Polytechnic of Turin in order to create a framework also of technical relation also to support also the standard that we underlined before. Obviously, next, to the — safety still remains our focus. I remember that when we speak about safety, we speak about the safety of our people, but we are speaking also the safety of our contractor. And obviously, a specific point of communication of our transformation is one of the key issue. And in the next month, we will — we have already started to discuss about the communication internally, to the stakeholders, externally. But we have to focus deeply in the next month in order to show the new vision of the company that is completely integrated with the new vision of Atlantia Group. Next one is the volume of activities in terms of digital operational mode. We have worked on 3 major items that is the asset or the fleet force management, all what is linked with the customer experience and what is linked with the operational excellence through the different process of the company. Just to go you — to give you an idea about the volume of activities, if we see the inward looking and so all what we are investment in order to improve our return on cost, we are thinking about to offer an amount of EUR 110 million. And if we see to what could be the services in terms of digital that we will offer also to our client and, externally, to improve our services. We are speaking about volume of activities of EUR 90 million. Just to — from around EUR 200 million of activities linked with the digital. To do that, we are involving the major company today in the market in order to support this important plan that, believe me, is one of the biggest case of digitalization that we have seen in the last year in — at least in Italy. Regarding — next one, obviously, what are the key issue for Autostrade per l’Italia. Also as Carlos said, is the possibility to close the agreement with the government and to receive the approval of the economical plan. I remember that in the — starting from — we started the discussion in the late July 2019. In September of 2020, we achieved agreement, formal agreement with the government, and we produced all the document to close the issue. We have also submitted the economical plan. We have received a different feedback from both the Ministry of the Economy and the Ministry of the Infrastructure. And today, I can say that there are no point of disagreement and everything is completely clear between us and the government to go ahead with the former approval. We can understand now that in this moment, there could be some problem with the change of the government. And obviously, with some critical issue linked to the pandemic and so we can understand there could be some delay in the approval because of the economic plan, even if everything is clear defined. I remember that for the settlement agreement, we confirm the total amount of EUR 3.4 billion that we have already foreseen in our plan of 2019 and 2020. There is one part of non-remunerated CapEx that is already defined. And finally is the reconstruction of the Genoa Bridge and some amount linked to project for Genoa City that are clearly defined, the amount for the reconstruction, and I remember to everybody that now we are managing the bridge that was reconstructed after the collapse of Morandi Bridge. In the new economical plan, I remember all the point that is — we have accepted to agree with the new provision of the authority of — for the transport. And so it is a financial plan on rubber basis. Finally, just to give you some numbers — some numbers regarding the traffic. This is the result of the 2020. We have compared to the 2019, we had a reduction of 20 — 27%. Just to give you the figures of the beginning of the 2021, we are close to 27% also in the first month, even if in the ’21, we are foreseeing a decrease of traffic of 12%. Regarding the EBITDA in this case, the reduction is of 57%, 3 are the major items of this reduction. If we compare to the 2019, obviously, is the reduction of — due to the COVID impact that is more or less EUR 828 million. One is linked with the major maintenance activities that we have carried out specifically for their activities on the tunnels that is around EUR 300 million and after the minor other amount that make the gap between what we have seen in 2019 and in 2020. There are some other major — main aspect regarding the numbers that we are seeing that are better specified in the table that I show in this chart. ——————————————————————————– Carlo Bertazzo, Atlantia SpA – CEO, GM & Non-Independent Executive Director [6] ——————————————————————————– Thank you, Roberto. Thank you very much. I think that if you can stay here, it’s important also for the Q&A section. And the next section of presentation is regarding Abertis. It’s our international platform. I’ll leave the floor to José Aljaro, the CEO of Abertis. ——————————————————————————– Francisco José Aljaro Navarro, Abertis Infraestructuras, S.A. – CEO, Acting CFO & Director [7] ——————————————————————————– Thanks, Carlo, and good afternoon, everybody. I’m going to remark Abertis’ main topics. And I would like to start highlighting the key priorities. If I’m to talk about the strategic lever, first, Abertis has to renew the asset portfolio. Really first, replacing expiring cash flows, mainly in Spain. As you know, as our main Spanish concession will end the concession contract at the end of August and also, it’s necessarily to replace those significant cash flows coming from Spain. And also, we need to increase the average life of our concessions. Second, we need to expand our geographical footprint, mainly creating new growth platform in new countries. In that sense, we was very success in this process. And in 2020, we successfully entry in Mexico, acquiring a company called RCO and also in U.S., Elizabeth River Crossing, we call ERC. In both cases, we apply our financial discipline and also we did very prudent financial assumptions, for both projects require a total EV around EUR 6.5 billion. Right now, we are in the process to integrate both acquisitions that require strong work from our team to integrate the new things, the new countries, the new procedures. And also, we try to implement our best practices. The key priority in Abertis is to extract value from the existing platform. I mean, as you know, it’s necessary to explore new opportunity in the short to midterm. That way is the most profitable way and with very low, low risk. We show a very good track record in the past, working in the current portfolio. And we did also this year some significant improvement, for instance, in negotiation with Mexico — with the Mexican grantor. We extended the concession 6 extra years in the project called Ramales. And also in Chile, we achieved agreement to implement free flow tolling in 3 of our concessions with extension between 8 to 10 months — 10 to 12 months in each of them. And also in France, we have been working with the French government with the idea to implement a free flow system in one of the road, it’s the A13, A14. That means that is one other key priority for Abertis. The next key priority is related to ESG. As you know, we are very sensitive to these issues. We are very oriented to environmental actions through the Abertis Foundations and also to road safety and innovation. For instance, in road safety, we did a reduction in the number of fatalities in our roads, more than 51% in the last 8 years. And that is another key topic in our group. And finally, talking about priorities is the financial discipline. In financial discipline, we are focused in 3 topics. The first, we try to enhance our cash flow generation. In that sense, we are doing a very good efficiency plan that was implemented for the period 2018, 2021 for a target amount of EUR 510 million, and we will overcome the initial target. The other point in financial discipline is related to maintaining the strong financial position. This year, we launched different bond issues. For instance, in Abertis Infrastructure (sic) [Abertis Infraestructuras], we launched EUR 3.5 billion including EUR 2 billion hybrid bonds in the period November 2020 and January 2021 with very excellent terms. For instance, an average coupon 3% maturity, 5.5 years. Also in HIT, which is our French holding, we launched also 1.2 bond issuance, below 2% coupon and 7-year maturity. And the third point in financial discipline is related to the balance, the — well balanced between growth and shareholder remuneration. As I said before, we have been growing this year and at the same time, we paid, in 2020, EUR 875 million in dividends to our shareholders and also we review the dividend policy. For the next 2 years, for 2021, 2022. And we’ve established a new dividend for the next 2 years amount, EUR 600 million. In the next page, we present the 2020 performance. Abertis achieved an EBITDA EUR 2.6 billion in 2020. That represents, in comparable terms, a reduction of 24%, mainly as a consequence of the reduction in revenues, EUR 890 million. And the revenues clearly was impacted by the COVID effect and the restrictions in mobility in all of our countries. We saw a very clear correlation between mobility restriction and traffic performance. That is obvious. The traffic in the key countries decreased significantly. In Spain, for instance, it was minus 30.6%. In France, minus 24%, et cetera, et cetera. Only in Brazil, we present a single-digit decrease with minus 7.5%. In any case, we remain very optimistic about traffic evolutions. I mean, based in that correlation that I said, as soon as the different government reduce restrictions, we’ll see a significant improvement in the performance in traffic. I mean, we are — we consider this effect as a very one-off effect, and we expect, quickly, a rebound in traffic performance. In any case, in 2020, we advertised a proactive management of the COVID crisis, implementing measures to protect employees, users as well as business and financial operations. And we acted through 4 different action plans. The first was through OpEx reduction, with a reduction of 9% of the total cost versus 2019, amounted minus EUR 143 million. The second was in investment. In projects, we did a CapEx reduction around EUR 300 million in 2020 versus budgeted CapEx, based mainly in prioritization of projects. It’s important to remark that we maintain our investment in maintenance. I mean, we keep it — the maintenance in accordance and in compliance with our policies and in accordance with the concession contract requirement. The third action plan was oriented to discussion with grantors, try to be compensated for the impact — for the economic impact produced by the business disruption. On that sense, we see different positions in the different governments. In some cases, it’s more favorable, like Brazil or Italy to compensate in the short term. In all the cases, it’s excluded from the concession contract, like in France. And in other cases, we consider that it will be necessary to take legal actions,, like, probably in Spain. And finally, in financing, we refinanced all the short-term maturity, in some cases, prefunding some maturities and also we’ll reinforce the liquidity position. And finally, a few comments about the 2 recent acquisition. I think it’s very remarkable, both acquisitions. As I said, one in Mexico, RCO is 876 kilometers in operations with a very low maturity, 28 years — 28 years of remaining concession life. It’s a good location. It’s the good connection between Mexico and Guadalajara. It’s a very important industrial corridor in the country, and Abertis holds a stake of 53.1% and our investment partner is GIC with 23% and also AFORES, the Mexican pension fund remain with 18%. The second acquisition is Elizabeth River Crossing in the U.S. It’s Norfolk, Virginia. This is really a very low concession, light, more than 50 years remaining. And also Abertis holds 55.2% stake with an equity consideration of EUR 600 million. And our investment partner in that case is Manulife Insurance. It’s a Canadian insurance company with 45%. That is the main key topics about Abertis. ——————————————————————————– Carlo Bertazzo, Atlantia SpA – CEO, GM & Non-Independent Executive Director [8] ——————————————————————————– Thank you very much, Pepe. I’d like to underline that, I don’t know, that [we select], a very outstanding partner both in Mexico and also in the U.S. This is part of our strategy, obviously, to have international partners alongside our assets. I leave for Roberto Mengucci. Roberto is Investment Director of American and Asia Pacific for a short update of our Overseas Motorways was in Brazil, Chile and Poland. Just to have a short overview. ——————————————————————————– Roberto Mengucci, Atlantia SpA – Executive VP & Highway Business Coordination Director [9] ——————————————————————————– Thank you, Carlo, and good afternoon to everybody. Likewise, it has been discussed so far, also for the other international assets. The main event in 2020 has been the relevant impact of the pandemic on traffic. All in, across the portfolio, traffic reduced around 20% compared to 2019, with a peak of 27% in Chile, mainly due to the — well, you know that our portfolio is mainly located in Santiago urban area, where strict limitation to the mobility were imposed by the authority, lockdown for many months. And — but we are confident that once the limitation will be removed, traffic will recover quite quickly. Well, at the level of EBITDA on a like-for-like basis before the FX impact, EBITDA decreased around 24% compared to 2019. Well, I would like to remark that notwithstanding the negative environment and the huge impact from the pandemic, the — on a stand-alone basis, the performance of the asset has been quite good. I mean, the asset has shown resilience. If you look at the 2020 performance, the cash EBITDA is well above 80% in Chile and around 74% in Brazil. So all-in good performance. This is also due to the ability of the management to mitigate the effect of the traffic decrease. And to — I mean, the OpEx reduction was around EUR 30 million. It means minus around 16% compared to 2019 through, I mean, a number of different measures that have been undertaken by the management in terms of G&A reduction, schedule or maintenance intervention and also related to safety and so on. Also, on the investment side, there was a reschedule, a shift, of around EUR 55 million. On the investment, I would like to — well, to remark the performance in Chile in Costanera Norte. Costanera Norte was able, in 2020, to complete the investment program, the so-called Santiago Centro Oriente Program. It’s the main investment in Santiago urban area in the last years. It’s composed by 7 different investments in order to remove some bottlenecks. And all the different investments were completed and in operation at the end of 2020. Well, economic compensation. All the management teams are trying to seek compensation, economic compensation for business disruption. It won’t be an easy discussion. In Chile, there is no clear — I mean, right to ask for compensation. We are trying to leverage on the catastrophic event declaration made by the government. In Brazil, the situation is different because the right is more clear. There is an ongoing discussion between a state fee with the authority in the state of São Paulo and the association of the concession. The right has been recognized by the authority. Now there is a discussion, I mean a complex discussion about the modality of calculation and compensation. On the support of the local community, I mean, all the concessions have been very active maybe through donation of medical devices and support, also support of a team of doctor in Chile. Chile, as you may remember, was one of the country more affected in Latin America by COVID. They progressed a lot. Right now, they are carrying out a vaccination campaign. And it is one of the most advanced in the world, probably they are together with the Israel, one of the most advanced. And right now, around — more than 40% of the nation has already received the vaccination. ——————————————————————————– Carlo Bertazzo, Atlantia SpA – CEO, GM & Non-Independent Executive Director [10] ——————————————————————————– So thank you very much, Roberto. The new section is related to ADR. I think that we have on line, Marco Troncone. Marco is CEO of ADR since last April. Marco? ——————————————————————————– Marco Troncone, Aeroporti di Roma S.p.A. – CEO [11] ——————————————————————————– Yes. Thank you, Carlos, and good afternoon. We can start from Page 25. First of all, I think as the industry is experiencing extraordinary times and unprecedented challenges, it’s worthwhile to put the current situation and performance a bit in perspective. The COVID impact is being incredibly severe, indeed. And traffic volumes in 2020 and still to date have dramatically fell down. The traffic will return in a time frame possibly still unknown, hopefully soon, but it would return in full. Within that the key fundamentals driving the growth of the industry will remain valid. And we — and that Aeroporti di Roma is very well positioned to effectively recapture those trends. Industry opinion leaders still agree on a doubling of global traffic volumes in 20 years, mostly fueled by an increase in available income, hence, an increase in propensity to fly in developing countries. While flying will be increasingly accessible to new customers as low-cost offering and efficient operations will further penetrate the market. This will result, in particular, and even after the COVID situation, to a confirmation of the leisure traffic growth potential in the medium to long term as a key mega trend. With a focus on routes originating from both Asian fast-growing origin and from America were established that market into several compelling destinations in Europe with the same progress in Europe. Okay. Hold on a sec. Okay. Sorry, there was a technical problem. So with a strong focus into traffic in Europe. So while the business segment may suffer from a certain structural reshaping yet still to be really evaluated, the touristic flows in Europe are due to resume soon and we start growing, both in relation to intra-EU traffic and also with more the leverage on long-haul flows, which contribution to overall total flows in Europe today account only for sole 16%. So in all this context, Rome is certainly very well positioned. Rome is the most visited city in Italy, of course, and sixth in Europe and one of the most important touristic destinations in the world. Certainly, just, strong origin being a capital of the city, but with a very strong, today, already inbound traffic and lesser traffic, which accounts for roughly 2/3 of total traffic. And also, long-haul traffic, those I was mentioning before, already are consistently growing over the last 10 years to a 5% average annual rate. So very well positioned. Passing to Page 26. So focusing a bit more on today while still looking to a more promising tomorrow. Our priority is, put simple, aimed at keeping secure our currency gap, operationally and financially, but also at exiting the crisis, possibly in a better shape than before. And being more ready for the challenges that the crisis is posing and, in fact, it’s accelerating. So the front addressed are a few ones. Firstly, certainly maintain a focus on ensuring a future-proof effort, which means basically to keep on promoting our new long-term infrastructural development plan which has been radically revised from a sustainability angle, which remains, still, a multibillion master plan which has been submitted recently to our [Sea] Division Authority and which is due to allow to capture in full our traffic potential or to basically to allow a doubling of traffic volumes from now to the concession end. But looking more on the short to medium term, this also means to find ways to remain competitive on the market. And in terms of airport charges, both through value protective regulatory schemes, and also through our continuous focus on operational efficiency. Regarding operational excellence, certainly maintaining a word class performance on quality and safety of services has been and remains a full point of our strategy. But a strong acceleration will happen — is happening actually on 2 most relevant strategic areas. Firstly, sustainability. We, of course, fully acknowledge that using the environmental footprint that decarbonization is, of course, a must. It’s not a, nice-to-have any longer. And to that end, ABR, which is really carbon neutral for — since some time, committed to become a zero-emission airport in 9 years from now or by 2030. And also it’s ready to confirm a consistent financial policy in order to support such perspective. So following also the Green bond issuance in amount of EUR 300 million, which has successfully placed on the market last November, with a demand in excess of 12x the offering. Second, a very important front, is innovation. Producing innovation is nothing new, actually, to Aeroporti di Roma, but certainly, we can and should do more. Firstly, by putting more internal discipline on what we already are doing, so creating a much stronger organizational focus in the company, but also looking at multiplying efforts and opportunities through open innovation concepts and possibly joining forces also with other like-minded airport operators in Europe and all south of Europe. Going to the next page, Page 27, focusing on the anti COVID actions. Yes, in the last few months, despite the impact on our financials and also on our organization, and I’m referring to the application of a temporary layoff scheme, which has hit all personnel in portion, which has been applied on average on a roughly 60% of working hours. Well, despite all that, a lot of energy has been put in place in order to contrast the pandemic and its effect. Firstly, to rapidly be able to operate the safest airport possible, so span of very important strong actions in terms of depth and breadth has been put in place. Also leveraging innovative technology solutions for more effective protections of passengers and personal operators. And testimony to that, among others, with recognition of 5 stars awarded by Skytrax as the first EU airport globally and also the sole one for a few months. Then on a more proactive front and basically to allow for this new normal to actually take shape, we took a very strong stance on rapid antigen testing with an integration of testing facilities in the airport operations from the summer 2020, then scaled up to a major drive through facility in our long-term parking. And an equally innovative stance, we took on definition of new travel protocols. So we were the first airport in Europe. And today, we are the sole one in Europe to put in place clean corridors or the so-called COVID-tested flights on intercontinental routes, which allow to trade quarantine restrictions, which we deem absolutely not an effective measure, and which is removed on those slides, for predeparture testing. We believe this is may be a real recovery enable, especially in the very short term as demand, hopefully, will be reforming as passenger’s confidence will be increasing, thanks to the roll out of the vaccination campaign, possibly as early as from this summer. But while safety concerns on the epidemics still remain. And while talking about vaccination, more of late, an active stance also has been taken on the vaccination front with a direct contribution. We put together a major vaccination center, again, in our long-term parking. In cooperation with not so much appreciated by relevant institutions. In fact, today, in a couple of hours, our Prime Minister, Mario Darghi, will be visiting our vaccination center. And going ahead to last page, Page 28. Let me conclude with the most relevant 2020 key performance data. So traffic, of course, badly hit, so a decrease by 77% or 11.5 million passengers in the system or less than 10 million passengers (inaudible). So certainly, a big hit, which, of course, produced very, very bad economy impacts. We had a reduction in revenues of roughly EUR 700 million. But yet with an EBITDA positive in the year, even also despite being a small amount, thanks to the strong cost reduction initiatives in the amount of roughly EUR 100 million. And those realized, certainly, by optimized infrastructure, utilization of infrastructure, by enforcing a temporary reduction staff by some 3,400 people active in 2019 down to 1,900 actually active in 2020. Of course, towards full application of a temporary day-off scheme, government funded. All in all, the OpEx reduction was in an amount of roughly 35%. Investment, of course, has been as heavily reprogrammed with a reduction of more than EUR 200 million versus the initial budget, so down to roughly EUR 150 million executed in the year. Of course, this is inconsistency with the actual operating needs in this traffic situation, but also for an appropriate management of financial resources. Talking about financing, of course, all relevant covenants, which were breached in our financial digitization were great in the year. And new sources were activated in a total amount of roughly EUR 1 billion among new loans and the green bond that was mentioned before. So landing on a quite safe cash buffer in excess of EUR 1 billion at the end of the year. I’d just conclude with a couple of words. Mitigants, which originated from our concession agreement. A concession, which has been extended to ADR as well as through all airport — internally inspected operators by 2 years. So our concession end. It’s now 2046. The concession will also allow, any ways, provisions for the protection of the overall economic balance of the concession. And anyways, in that case is, for partial recovery of regulatory revenues deficit suffered in the now concluding tariff period as per Article 45.1. And also, even though it’s not mentioned on this page, we’ll — the last budget law also allowed for a subsidy to the airport system in Italy, a total amount of EUR 450 million, 20% of which will be addressable by Aeroporti di Roma. So in the year, we’re expecting EUR 90 million of subsidy in terms of state aid, which is currently under the approval of the Development Commission. I can conclude here. ——————————————————————————– Carlo Bertazzo, Atlantia SpA – CEO, GM & Non-Independent Executive Director [12] ——————————————————————————– Well, thank you very much, Marco. We appreciate. And now we have Franck Goldnadel. Franck Goldnadel is with us since September 2020, and is new CEO of Airport of Nice coming from Airport de Paris. Franck, are you on the line? ——————————————————————————– Franck Goldnadel, Aeroports de Paris SA – Executive Director, Chief Airports Operations Officer & MD of Paris-Charles De Gaulle Airport [13] ——————————————————————————– Yes. Thank you, Carlo, do you hear me? and all Atlantia team to give me the opportunity for presenting an overview of ACA. Regarding the main figures in 2020, the airport system serving Aéroports de la Côte d’Azur under 4.6 million passenger registering 68% fall in traffic compared with 2019. This reflects the spread of COVID-19 pandemic, of course, and the worst impact concerned international traffic because of travel ban and closing borders. In terms of revenue, operating revenue, amounts to EUR 144 million is a reduction of EUR 156 million compared with 2019. It’s 54% less compared with 2019. Aviation revenue decreased by 52% compared with 2019 and certainly reflecting the impact of the traffic of the spread of the COVID-19 pandemic. Other operating income of EUR 61 million is down 55% compared with 2019, primarily due to reduced income from retail substantiations and car park, reflecting the impact of traffic decrease and also the mixed traffic international and Schengen passenger. Regarding — we, of course, launched a cutting cost plan to reduce operating costs. And finally, we had EUR 114 million, down by 32% compared with 2019. This reflects the impact of closing Terminal 1 in Nice Airport. Reduction of staff cost achieved, thanks to the use of government — French government interim support schemes, chomage partiel and a reduction in business rates, directly linked to the performance of traffic. This is why EBITDA of EUR 20 million is down EUR 102 million compared with 2019. Regarding capital expenditure, which was hit by the slowdown caused by the various lockdown period from spring 2020, amounts to EUR 43 million in 2020 compared to EUR 6 million in 2019. Despite pandemic prices, the company carried out work deemed (inaudible) for ’20 operational continuity and sustainable issues that are very important. In terms of tariff evolution, we got an agreement to increase by 3% tariff from — since first of November 2020. And in the same (inaudible), we started discussion with the grantor in France to find a solution regarding the economic and financial rebalancing of the concession and the pandemic crisis. Regarding cash, we secured cash position in 2020 with a new financing. In conclusion, I would say that as the other speaker of Atlantia Group, we had last year an important discipline to adapt our organization and cost with the level of traffic. We are going to do the same for the next future during the traffic recovery period. Thank you. ——————————————————————————– Carlo Bertazzo, Atlantia SpA – CEO, GM & Non-Independent Executive Director [14] ——————————————————————————– Thank you very much, Franck, for both ADR and Nice, for obviously 2020 and maybe also 2021, are very, very tough time. But I come back about airport strategy in a few minutes when we cover the point strategic update. Right now, we are — we have a start-up section, and it’s my pleasure to introduce Gabriele Benedetto, who is the most digital CEO that we have for the time being, obviously. And please, Gabriele. ——————————————————————————– Gabriele Benedetto, Atlantia SpA – CEO of TELEPASS S.p.A. [15] ——————————————————————————– Thank you, Carlos, for the very warm welcome. And let’s spend some few words about Telepass. After 3 years of deep transformation or dramatic transformation of the company, we now reached a maturity to introduce a new brand in Telepass. On Page 32, I hope it will be clarified to you that today, Telepass is not anymore an ETC company but a fully integrated mobility services provider with our proprietary payment scheme embedded. This is the most valuable message, in my view. Being the oldest fintech in Italy. We were able, in the last year, to catch or maybe to anticipate some changing that was arising in the mobility cost space. The new one-stop mobility message of this slide, this chart from my side, is that now we are ready to compete in a new eco-space of mobility. The so-called FIPAs offer, it’s a full offer of services for cards, all the payments, all the services around the cards, accordingly, the kind of ownership for that card. Then the T Pay offer, which is our offer for an integrated mobility service and the future services that the new infrastructure, the new connected infrastructure will provide to people on the move. Then the T Care platform; the T Care platform is, in our view, the most evolute insurtech platform based on the real mobility data of Telepass. This is the real value of our insurance project right now to leverage our mobility data in order to customize the best of — the right momentum or the mobility needs of our customer. Then there is a new space for corporate, a small medium enterprises in Italy. After COVID, the needs of those corporations to offer mobility solutions, which are compliant with the new COVID regulation. So we are going to launch, at the end of this month, a key business platform. Then let’s move to Page 33. Let me introduce the new T Next, the new Telepass Next. It’s a totally redefined new onboard unit with inside, 30 years of experience in tolling and the most advanced technology in voice recognition partnering with Google. Let me say it’s more than updated black box. It’s something more. It’s some experience over voice that you probably are faced in your home, in your house with the new technology, move in your car. All our mobility service are under redefinition right now to be ready with a native integration with the new onboard units. Some comments on the first part of this chart on the insurance business line. It has been difficult for me to explain our strategy at the beginning. First of all, Telepass is not an insurance company. Telepass has to be the best partner in delivering the insurance services, capturing the mobility needs of each customer. We are agnostic in terms of business model. We launched a broker to collect the best products in the market or an MGA in order to leverage the data of Telepass Pay approach to provide the best product to our customer. With this distinctive approach, in my view, we are going to release at 21st of March the first European data-driven insurance policy that reimburse drivers with a strong delay in estimated travel time automatically in their bank account in a few seconds. Let’s move to Page 34 in order to provide some comments on the figures that affected Telepass this year. First of all, let me focus on EUR 234 million revenues, 6% of increasing revenues in the most dramatic year for mobility. What does it mean? That over the 2020, 350,000 of net new subscription were added to our customer base. In here, where, for example, mobility in the toll road were lower than 20% compared to the year before, we were able to increase our net subscription customer base, which means the ecosystem of services is valuable for the customer because even though they are driving less time, less kilometers in that toll road, they are leveraging on other services. And this was to confirm the proof of how good was the strategy that we launched 3 years ago. COVID impact in our figures are quite easy. We are missing the revenues, almost EUR 10 million, which are the lower merchant fee we are getting from the mobility provider, the infrastructure, the case holder. All the mobility was shrinking. But at the end of the day, we are missing EUR 10 million of revenues, which are EUR 10 million of EBITDA in our figures as of today. As you can see, OpEx has strongly in growth trend, because we decided that at the beginning of the year, to confirm all our investment, to confirm all our strategy, because we strongly believe in the goodness on our strategy as today. So in order to provide the last, very last message, probably, it was a difficult year, of course, for everyone, also for Telepass. But for sure, it was satisfactory in terms of strategy execution. And now we are ready to catch the new ’21 — 2021 challenge. Thank you, Carlo. ——————————————————————————– Carlo Bertazzo, Atlantia SpA – CEO, GM & Non-Independent Executive Director [16] ——————————————————————————– Thank you very much, Gabriele. And right now, we move on, on the section about the strategic update. I think that I try to [be] very fast as much as possible. And then we have a Q&A section. Page 36. Just to introduce the concept that in the last months, from October until February, we took a bold [erectus] so Atlantia’s spent a lot of time just to — rethinking about the strategy and the future of Atlantia. As usual, we start from very important mega-trends that impact our industry, especially the transportation industry. We think about the future strategic direction of Atlantia, and we are taking into consideration several key external factors and industry trends that we’re shaping the world that we live in. Mega-trend such as the emerging of integrated mobility, increasing urbanization, new logistical model and ever-growing focus on sustainability, create, for our point of view, a lot of opportunity, a new opportunity for the group. We have also to take in account that in the meantime, competition in the restructured space continue to increase, accelerated by, today, low rate environment. And we know — everyone knows that the large number of funds and direct investors have been acquiring infrastructure assets in the last year and some are deployment industry expertise. Leveraging and broadening our knowledge and expertise across the portfolio to their advantage of the leading operating capability, we’re continuing to underpin our competition advantage going forward. So technology innovation is, more than ever, relevant in our industry, impacting how a user interact with us and how we deliver our services and maintaining our assets very well. We were continue to drive innovation in our existing portfolio while also using technology to create new source of profits. Next one, please. As I said before, we have, I think, some track record about innovation and technology. And in this simple page, we try to summarize what the — our group done in the past and what we — I don’t know, which is the possibility to improve our technological DNA for the future. Some of this area, obviously, is already covered by colleague in the privacy speech. And I’d like to move on even in next one. The other starting point of our thoughts about strategic or future strategic. Obviously, after the mega-trends is defined, a clear mission of Atlantia Group for the future. In this simple page, we tried to describe that make mobility increasingly sustainable, safe, innovative, efficient and responsive to the need of society as a whole. I think it’s clear statements of what we intend to do for the next year. Mission, vision and also, we revised our core value. And in this page, you can see, I don’t know, some key elements of our core value. Going forward, in Page 39, we try to define in 5 different blocks, which is the main goals of future of our strategy. We have identified, therefore, full strategy initiative that we believe will allow us to successfully progress toward in our region. First of all, optimize and rationalize our current portfolio. I spent some word after. Second, leverage the plenty of platform as an innovation pioneer to accelerate the development of innovation. Third, continue to expand the portfolio through synergetic and value-added investment to complement our existing assets. Last but not least, going forward, we are going to be more nimble and flexible in the way we’re deploying capital. As we progress in all these initiatives, we also ensure that our decision meets our sustainability targets. But this is also — we spent time during the last time to define, as I said before, our EGM target for 2023. Looking for Page 40, I think that what does mean development of our portfolio of asset for the future. I go through, first of all, about the airports. With regard to the airport, we believe we see a full recovery of leisure traffic, while business traffic might take in time to come back. We don’t know how many years, how many — 2 years, 3 years, it’s not clear for the time being. But sure, business traffic require more time. Our focus remains in the on-call radial destination such Rome, such, obviously, Nice, and we want to continue to grow in the sector and use innovation to meet our sustainability target and improve customer experience. What about toll roads? We expect a quick and full recovery once lockdown measures are fully lifted. There are, I think, 3 main topics that we intend, in the following months, to cover. First of all, finalization of ASPI start-ment sure is our top priority. We have also focused on the continuous improvement of our Abertis portfolio, including expanding its average concession maturity. Taking account, obviously, that in the next 2, 3 years, some very important, the concession in Spain, total concession would expire. In our area, keeping our team busy is innovation in the smart road. Technology can really improve the experience of our users, while, along, improving safety. Mobility strategies, that is Telepass, for us, as a business area is one of the highest growth area and the opportunity to extract significant synergies and add value in the group. Our key asset, as I said before, Telepass and our plan is continuing developing in a pan-European e-tolling and mobility services leader. Finally, we’ll strategically evaluate the remaining piece of our portfolio and optimize our investment line with overall mission and vision. Of the Page 41, I know very well, it’s very effective for a picture in the middle. But just to point out again that switching through innovation, we are seeing a fast accelerating in the transportation industry. And for us, it would be a key growth lever going forward. Technology allows end user to switch seamlessly between the method of transportation. And hence, we expect more integration going forward. We also expect mobility of the future to be more sustainable. Think, for example, to this occasion that Autostrade per l’Italia has a very smart and important project along our toll road and airway for the next, I think, 6 months, maybe we complete close to 100 different services area with very, very fast charging point and ensure connected shares and autonomous. The next one is very, very key pages, because we may describe in few words as much as possible. What does it mean, innovation? In order to take advantage of opportunity that this evolution will bring Atlantia, we will continue and expand this role as innovation pioneer. Technology will allow us to drive operational and financial improvement in our core portfolio, but also build a new business in adjacent areas. We have defined, therefore, a full suite of initiative to drive innovation, some of which include partnership and collaboration with external player to complement our capability. I think it is important to say that for an organization perspective, Atlantia Holding Company will focus on some specific area of innovation. Our main subsidiaries, such as airport division of Telepass, will focus on innovation, which is not specific for that business. And additionally, we will intend to create, in the coming months, a venture capital funds for early-stage initiatives, which are in line with our vision. We believe, strongly believe, we’re important to our future success to start with a separate vehicle because require — this kind of activity require a different mindset, talent pool, skill set, time horizon, financial model and also set objective. The next one is try to — what does it mean for us, expansion into new synergetic fields. This page tried to illustrate in more detail, which is the new synergetic fields. For each of the main area of innovation, for example, Smart U mobility, we have identified specific use case such as smart parking and EV charging station. Some opportunity such as transportation terminal, smart road, impact of multiple companies on our group. And there, we will see both overhauling, and the division cooperate just to devote new solutions such as practical maintenance, smart dynamic pricing and the digitalization of services in our terminal. Just to give you an example that as a holding company, as Atlantia, I think to — yes, 2 weeks ago, we decided to invest — there is more amount of money, but it’s more or less EUR 15 million in very innovative, I don’t know, new mobility. And for us, Volocopter is a case study. And we have subscribed the last of the funding around, alongside with our leading transportation technology company. But you can say in this page, Volocopter is a leader in the commercialization of vertical human mobility solution. It is launching, commercially, this year for logistics and targeting next year for passengers. It has the potential to have a great positive impact of a way, good and positive move in the future. The vehicle have zero emission, and there is the potential to integrate these services with our, for example, business, like, area or in the service area along the network in Italy and outside Italy. The last one lever is multilevel investment platform. I think that is something that I’d like to describe you in details because this page provides an overview of our organization model. We will adapt to invest in the future, which is a multi-levered investment platform structure. The all-in levered Atlantia means we set the overall strategic direction and enable to — its sales execution, obviously, this kind of program. Shareholder investing in our holding company benefit from a geographical and access diversification and liquidity and so on. But as we have opened then in the past, as recently last year, I remind 3 different example. At about this level with the GAC in our kind of DMC-run company, and at level of Telepass with partnering group that the closed G with them, I think he question of a few weeks. I think as we’ve done in the past with great results, at the absolute level, we will continue to evaluate the option to open up the capital of our companies in order to have some benefit from different partners, different experience. And also to add some firepower group in acquiring new assets with them. We quit them. Finally, the new element I’ll be introducing today is our intention to set up special investment vehicle, as I said before, such as a venture capital fund. I mentioned it, that is very important for the future and to the deployment of a new exciting technology. We need to invest in start-up and even then the resources connection, network and just to improve the highlight of successful. As I said at the beginning of this conference call, with the Finance Board Director, ESG agenda for the next 3 years. And in this page, I’d like to point out that we select clear targets in 6 different key areas: climate change, people, territory, community, circular economy and, obviously, ethics and governments. Last but not least, our presentation. I try to respect our time frame — the time frame was 1 hour and 30 minutes, 1.5 hours. This stage, I think that we have to dedicate some minutes. But just to recap, the equity story of Atlantia is evolving to allow us to retain our leadership in fast-changing environment. This is an evolution, not a revolution. We have been investing, innovating, partnering with our investors and improving our ESG credential for a long time. Put the pace of innovation in changing, so we are adapting to be quicker and more nimble. For a strategic perspective, Atlantia will become a publicly listed investment management company, focusing on macro trend that we are shaping the world mobility. Operating large and global portfolio of assets, very international, with a distinct focus on technology innovation. We’ll be continuing to be a leader in applying innovation technology, to be transportation infrastructure sectors, delivering tangible improvement to the performance of its asset while enhancing the customer experience and expansion into new area to the benefit of our customers, where Atlantia can extract main full shareholder value. We are going to continue utilizing our multi-level funding platform at the holding and asset level, but we will now also raise personalized investment value to increase our ability to foster innovation. Finally, we want — I want to become the preference choice of public authorities partner who is able to provide next-generation service and solution to a highly mobile, connected time pool and demanding seasons. I think that’s just to summarize what does it mean for us, the new world of mobility in our walls, I think that in a simple way, we can save a new world of mobility, sure to be smart and to be safe and to be sustainable and to be seamless for us is the key message. Thank you very much. ================================================================================ Questions and Answers ——————————————————————————– Operator [1] ——————————————————————————– (Operator Instructions) The first question comes from Nicolò Pessina of Mediobanca. ——————————————————————————– Nicolò Pessina, Mediobanca – Banca di credito finanziario S.p.A., Research Division – Analyst [2] ——————————————————————————– Yes. And thank you so much for this strategic update, which I find very useful. I have 3 questions. The first one on ASPI. In case of new agreement with any institutional investor, would you go ahead with the merger plan presented last year or would you prefer to maintain the ownership of the asset? And in this regard, do you think that any agreement, where an agreement would be possible before any final say from European Commission on the Milleproroghe decree of last year? Second question on the call option on Cellnex, I’m wondering if this is still part of your strategic options and if you are — if you have any plan in this regard? And final question, if 2021 is in line with your guidance, what should we expect for the dividend at the end of this year? And would you also consider the payment of an interim dividend? ——————————————————————————– Carlo Bertazzo, Atlantia SpA – CEO, GM & Non-Independent Executive Director [3] ——————————————————————————– Thank you very much for your questions. I go through directly the 3 different — I don’t know, questions. First of all, you know very well that last September, we, the staff and the Board of Directors we did a dual-track process. If, for any region, it’s not our best case, obviously, the transaction with the current consortium is not possible for a lot of reasons, I don’t know, sure, we have to remember what we have a demerger in place and the demerger process. And I’d like to point out that 99% of shareholder obtaining AGM last January would fall in the AGM. Because we have — for this reason, we introduced the dual-track process. For European Commission, we hear about it. And I think about the Italian government, at few months, to cover a point to raise the European Commission. And — but frankly speaking, we don’t have any kind of, obviously — which is the questions that were raised and which is the time frame. Based on the public information, we know that the European Commission sent to Italian government a so-called EU Pilots that is very preliminary phases, introducing some questions about the Milleproroghe as of December 2019. Second question about the co-option of Cellnex shares. You’re right. We have a co-option. Co-option maybe is very simple words. We have a co-investment agreement related to the stakes of Cellnex from time to time owned by Edizione. And we know, because this is public information, that the company, Cellnex, would present to its shareholder at the end of this month a new one [variation.] If I remember right, we are speaking about EUR 7 billion. And I think it accounts the strategic rethinking that the Board of Directors did. We have did — we have done in the last 2, 3 months. I think that our co-investment agreement is pretty long, until 2025. If you remember right now, well, but must to confirm, please. And I don’t know, for the time being, I think that we have to duplicate our efforts, our financial resources to the mobility, the new world of mobility. Where, in any case, the co-investment agreement is there. It’s pretty long. And if at certain points of time, this kind of investment could be interest for the company, we are there. 2021 dividend policy. First of all, I think that we have to take in account how a pandemic obviously affected our business also in the coming years — in the coming months, I’m sorry. And for the time being, as Tiziano said before, our sensitivity right now is to have a traffic, compare it to 2019, in the toll road, overall, different area in Europe and also in South America, approximately 10%, minus 10% compared to 2019. And about the airport business, overall, we are speaking about minus 70%. Based on our budgeting exercise, we can see at Atlantia level the coming dividend expected this year without taking account any dividend from AVR, any dividend from — means no dividend from Autostrade per l’Italia. I think that the overall amount that we can expect is higher than EUR 500 million. I think that next year, from 12 months, the Board of Director will decide what we can do with this amount of dividends, taking account also the pandemic effect for remaining months. ——————————————————————————– Operator [4] ——————————————————————————– The next question is from Enrico Bartoli of Stifel. ——————————————————————————– Enrico Bartoli, Stifel Europe, Research Division – MD [5] ——————————————————————————– I have three as well. The first one is related to, in general, the change — the political change that occurred in Italy recently, the new government. I was wondering if you are experiencing some different approach from the new government compared to the previous one. And regarding the approval process for the new financial plan of ASPI, if you have some, let’s say, some expectations in terms of timing, in terms of the final outcome. Any comments on this would be very, very helpful. Second question is related to ADR. If you can provide some details on the discussion that you’re having regarding the new regulatory period, in particular, in terms of the return trend we expected next year. The possibility to recover the impact on passengers from the COVID. If I remember well, in the contract, you are entitled to around 50% recovery on that. And if you expect any impact on the activity of ADR from the situation of Alitalia, the press anticipated that there is a plan for a significant reduction in the fleet of the company. And the last one is, I know it’s really, really difficult. But if you can give us as your, say, your general thought about the possible recovery of traffic, not only in 2021 but when the 2019 level, in your mind, can be reasonably reached again. ——————————————————————————– Carlo Bertazzo, Atlantia SpA – CEO, GM & Non-Independent Executive Director [6] ——————————————————————————– Thank you for the questions. Well, about the first one. The relationship with the new government and Autostrade per l’Italia, different level of decision, especially about the new economic financial plan. Sure, we appreciate the general overview and approach of a new government. It’s very early to say something or more details. You know very well that the new government is very busy for most important things throughout the pandemic. And as Roberto said before, at the end, I think that all documents, you know very well that there are 3 different levels of documents. We are speaking about a transaction agreement. We are speaking about the new concession scheme. And then there is also the new economic plan based of [ERT] system introduced recently. The timing is very difficult to say. Obviously, we request and Autostrade per l’Italia request to have a feedback, as soon as possible, from the new representative of the government and we wait. And we hope, obviously, that something move forward in very short time. The questions that remain open at the end, because the company has sapped all requirements provided by the government just last November, if I remember well, November 19, and the only one open point that we have is the so-called Article 10.2, that the government required that the facsimile days of 3 different level of documents could be effective only if there will be the transfer of cover of Autostrade — the control of Autostrade per l’Italia to CDP consortium. This is the only one point that remain open, it’s very pretty important. And the Board of Autostrade per l’Italia, with the support of our Atlantia, is not able to sign this kind of condition. About ADR and the possibility to recovery part or all of pandemic effect of traffic. You are right, there is some regulation of ADR that is public, provide some possibility to recovery if the traffic, obviously, is negative during the regulatory period, higher than 5%. And I know, but I ask to Marco, if he’s still available, to provide some details, that there is some discussion right now with the regulator. ——————————————————————————– Marco Troncone, Aeroporti di Roma S.p.A. – CEO [7] ——————————————————————————– Yes. Let me just say a couple of words. The economic regulation is certainly an issue as the tariff period 2017 to 2021 is expiring, of course, this year. So this is the time to discuss the tariff dynamics for 2022 onwards. So physiologically, we would have been discussing this issue with the regulator. However, the process is due to commence fully only a bit later on down the road. And mainly the consultation process will start as from August. So we still have launched a proposal as to what the tariff dynamics for 2022 should look like. So a bit too early to say, but directionally, we can say that in terms of returns, so allowed WACC on regulated activities. We certainly expect a bit downward pressure in the consolidation of the actual, let’s say, levels of the risk-free rates. So the rates. However, we expect also the increased risk appreciation on the sector to come into play. I’m referring to probably a reappreciation of new level of assets better in the WACC. So all in all, we do not expect, also in consideration of this last point, a material deterioration of allowed WACC. Regarding the mitigants, concession mitigants, as I was mentioning before, the concession agreement provides further protection of the overall economic balance of the concession, if that equilibrium, that balance is in prejudice for reasons out of the responsibility of the concession, which is the case. To that end, it will concur to the administration, to the theorem of this agreement also with extension of the concession by 2 years, as well as the state paid in the amount — in the expected amount of EUR 90 million, which should be happening later on. On top of that, the provision, Carlo, you were mentioning that 50% of the traffic deficits suffered in the regulatory period is normally an item which is allowed to be recovered in the following period. What we are discussing, as these item promises to be a sizable one, what we are discussing is a way to basically re-protecting full that item over a sufficiently long period of time so as not to create any prejudice on the competitiveness of our airport charges. Finally, last, sub-question on Alitalia. Certainly, Alitalia is important to us as it was representing some slightly short of 40% of consumer traffic in 2019 or 28% to 29% of additional revenues in terms of contribution against other revenues of Aeroporti di Roma. The expected fleet size, I think, you were referring to, allegedly in the region of 50 aircraft. Certainly, this refers to the initial fleet size, which shall take in consideration the contingent situation post COVID. The market remains, of course, extremely soft. Hence, it will be probably inappropriate to start with a larger fleet on top of what it will be productive from day 1. So to our knowledge, based on the discussion we have with Alitalia anyways, the plan remains firm on a target fleet size in the region of 100 aircraft. So the, let’s say, potential remains intact, of course, when better times will come. And also, within that product plan, also it has material chances to be both fully successful in consideration of the large, let me say, capitalization of the promises by the state in the amount of EUR 3 million. ——————————————————————————– Carlo Bertazzo, Atlantia SpA – CEO, GM & Non-Independent Executive Director [8] ——————————————————————————– Thank you very much, Marco, for a very comprehensive answer. As to the — about the last point, traffic forecast. The question — the answer is very easy for Toll Road business. As Roberto Mengucci told before, for example, in Chile right now. What’s in issue in programs is 44%. In Cuba, we have — and we see very positive effects on traffic. But also we had experienced last year total road traffic during summer time probably to recover very, very quickly. What does it mean, I think, that to see again the level of traffic of toll road worldwide in the same level 2019 is highly likely that this could happen in 2022. Different for airport traffic. Based on — in the collected a lot of data, a lot — and forecast, we have a European and non-European airport and online company. I can say, right now, the best estimation that we have is that for Rome and for Nice, the traffic — 2019 traffic could be recovered in 2023 or 2024. But it’s very difficult. It depends what it means for the future, future months, the vaccination program in different countries. Because when we speak about very final destination airports like Rome and so on, you know very well that inbound traffic for non-European passenger is the key in terms of value. But in any case, what I said before is the best forecast that we have for the time being. ——————————————————————————– Operator [9] ——————————————————————————– Next question is from Elodie Rall of JPMorgan. ——————————————————————————– Elodie Rall, JPMorgan Chase & Co, Research Division – Research Analyst [10] ——————————————————————————– The first one, if we may just come back, should you be able to divest ASPI? Would you actually consider a special dividend? Second, in terms of negotiation with CDP, I mean you gave us a lot of highlights. But if you could just summarize what’s the main bottleneck in order to really get this agreement. Is it the price or is there — are there any other issues? And lastly, broader question on your current activities. Assuming you’ve disposed ASPI successfully, any other assets there currently that you would consider either reducing a stake or disposing of? And equally, any other — any stakes — any assets currently where you would consider actually increasing stake? So I’m thinking Getlink, for example. ——————————————————————————– Carlo Bertazzo, Atlantia SpA – CEO, GM & Non-Independent Executive Director [11] ——————————————————————————– Thank you very much. I think that the fall to the side, which is the usual proceeds of potential cash-in coming from the disposal of ASPI, we have to understand, obviously, if it’s a transaction or not first. And because you know very well that we resolved the right to sell of 88% is one thing. If the merger has been in place, right now, we are speaking about 50%, 55%. That means the controlling stake or ACC. Just in general terms, I think that if the disposal at the end will happen, I think that, first of all, we have some reduction of debt to do. Second, we have to review our portfolio of financial needed for future expansion, thinking about, for example, what does it mean for Telepass to become a pan-European player in the tolling and service mobility. I think that the pipeline, obviously, is not public, but it’s pretty long. And third, I tried to describe, which is the strategy for the future, and we have some opportunity to pursue. If for any reasons, obviously, this kind of opportunity or M&A activities is not possible, or on the end, I think that the Board of Directors have sure to decide if the cash-in net at the holding company will be materially positive. About CDP transaction, as described last time by the Board of Directors, there are 2 key areas. First of all, it’s not in case only questions of valuation that also the term and condition they proposed as consortium is not in line with our expectation, and we’re feeling that there is some work to then in the coming weeks or days, what you want, just to try to align with different interests. But both price, valuation, cap and indemnity; and third, the general timing condition. I think that we have 3 different main area, but we have tried to improve in both sides. Disposal, non-core assets or potential increasing stakes in current assets. First of all, you know very well that we have 2 different minority stakes under selling process right now. One is stake of 15% in Portugal. The name of company is Lusoponte. And the second one is the majority stake of a listing company in Poland and the name is Stalexport. We are reviewing our full portfolio of assets. I cannot disclose right now if whether our assets that we can consider no core or no longer core. Sure, we have some — our asset like Aptiv that we are evaluating what we do — what we intend to do in the future. You know very well that the stake of 24% in the listed company, Aptiv, 80% is already addressed with the color. It is in place. And the other 16%, more or less, is obvious our investment direct in our annual balance sheet. But just to recap the situation about Aptiv, we bought Aptiv stakes as part of a deal of Abertis in 2018. At the beginning, the plan at the time was to exploit an investment opportunity for Abertis, also in the greenfield projects together with Aptiv. Actually, the story went differently. Abertis has the chance to invest mainly in the brownfield opportunity like Mexico and the U.S., Virginia of last December. Opportunity, which the pandemic impacted all the industry. We can’t certainly start a revision in our portfolio strategy, but current market price do not help us any decision with that. You know very well, which is the market price of peak right now. We have to wait for stock exchange recovery. Before thinking and taking any kind of decision about this kind of stakes. Lastly, just to cover the last point that you raised. I think that we are very, very, very happy about the investments. Notwithstanding the Brexit, the pandemic effect of COVID. You know very well that the stock price of the Getlink improved with respect to the enterprise. I can say only that we are very happy with the investments. And I don’t know. Sure, panel like Europanel is part of infrastructure field that we are looking. ——————————————————————————– Operator [12] ——————————————————————————– The next question is from Stefano Gamberini of Equita SIM. ——————————————————————————– Stefano Gamberini, Equita SIM S.p.A., Research Division – Analyst [13] ——————————————————————————– Three questions also from my side. The first, I got in the presentation, Page 7. Why 2021 operating cash flow is only up EUR 500 million in 2021 versus 2020 despite motorways traffic expected to be — projected at less 10% on 2019? If I’m not wrong, this is the most part of the cash flow related to the motorways. While if I’m not wrong, the airports that account for EUR 500 million, EUR 600 million. So do you expect a significant increase in OpEx during 2021? The second, if I may, still regarding the disposal process of ASPI. ACS, your partner, expressed interest in ASPI. So in this case, could you also consider that if they want to, for example, bid through Abertis also changed the shareholder agreement in Abertis. So this company could be involved in some way in the future in a potential interest on a ASPI stake or not. And third, regarding still Abertis, if you can update us regarding the negotiation with the government on AP7 compensation as well as regarding the leverage of Abertis seem probably quite high. So is still there the risk of a downgrade of Abertis to junk or otherwise through the issue of the 2 hybrid bond? Do you expect that investment-grade will be confirmed? ——————————————————————————– Carlo Bertazzo, Atlantia SpA – CEO, GM & Non-Independent Executive Director [14] ——————————————————————————– For the first questions, I’ll leave a room to — the floor to Tiziano. ——————————————————————————– Tiziano Ceccarani, Atlantia SpA – CFO [15] ——————————————————————————– Yes. Thank you, Carlos. Thank you, Stefano. You’re right. Basically, FFO 2021 is reducing, mostly affected by traffic in total. We are estimated basically on recent data end of — sorry, at March 7, a 10% reduction toll road and 70% reduction in airport traffic. And this is the most relevant assumption affecting, of course, revenues than EBITDA and FFO 2021. All of the other assumption has been confirmed. So some other effect might be considered when looking at FX and some other, of course, has impact and consequences on our derivative exposure from interest rates. All of the other assumptions are in line with 2019, of course, and 2020 results. ——————————————————————————– Carlo Bertazzo, Atlantia SpA – CEO, GM & Non-Independent Executive Director [16] ——————————————————————————– Thank you, Tiziano. About the Abertis, I think that a simple answer to the last one, I think that after the issue of a hybrid bond by Abertis, for 2 point — if I remember one, 2-point something billion EUR across the end of the year, beginning this year show a base of assessment that we can make right now. The investment-grade of rating of Abertis is not under pressure. Everything could be changed in the future depends on the traffic and the effect in the coming months in Spain, in France, especially in France and in Spain for the pandemic point of view. For the time being, base of forecast traffic that we have, we don’t see any kind of pressure on the debt level of Abertis. About the second question, we read about ACS interest for Autostrade per l’Italia. Of course, we are happy to see more buyers. We are good friends and partner of ACS. In Abertis, no problem to open a discussion with them also for Autostrade per l’Italia if they wanted to evaluate this kind of investor opportunity in Toll Road. Obviously, we appreciate that our partners, so important partners for us like to invest in Italy. ——————————————————————————– Operator [17] ——————————————————————————– The next question is from José Arroyas of Santander. ——————————————————————————– José Manuel Arroyas, Grupo Santander, Research Division – Equity Analyst [18] ——————————————————————————– Just one question from me actually. In July last year, Atlantia committed to selling out of ASPI in the space of a year. If I don’t recall incorrectly, this was a commitment with the former Italian government. Does the new government need to respect this previous agreement with you? That would be one question I’d like to ask. And in connection with that, would Abertis interest, which ACS has also suggested, be in compliance with this agreement to sell-out of ASPI by Atlantia? ——————————————————————————– Carlo Bertazzo, Atlantia SpA – CEO, GM & Non-Independent Executive Director [19] ——————————————————————————– Thank you. I’ll try to — first of all, I think that this one information is missing in the last July, a trend here declared to the government is our ability to sell the majority of Autostrade per l’Italia at market condition — a condition — and market condition and obviously, the price under a competitive process. And I think that the information that we commit to sell by 5 years. So within 5 years, it’s something that, I don’t know, we don’t ever never, never take this kind of commitment or time frame. Back to the second questions, I think that I had to repeat the same answer that I did a few minutes ago about the relationship with ACS. Based on the information that we have a few — 2 weeks ago, I think that the ACS declared the interest about Autostrade per l’Italia, but I never, never hear the interest from Abertis point of view, if I remember well. ——————————————————————————– Operator [20] ——————————————————————————– Our next question is from Marcin Wojtal of Bank of America. ——————————————————————————– Marcin Karol Wojtal, BofA Securities, Research Division – Analyst [21] ——————————————————————————– Yes. So a couple of questions on Abertis again, if I may. So just looking at the balance sheet of Abertis, do you see any capacity for Abertis to continue to look for acquisitions of new assets or they are more likely to focus on integrating the recently acquired companies for the next year or 2? And then question number two, on Abertis, with regards to the so-called AP 7 dispute with the Spanish government, which is related to the Acesa concession, which I believe expires in August 2021. Could you provide an update? What do you expect? Do you expect a car tooling or a settlement? And when do you expect to have the final outcome of the AP 7? ——————————————————————————– Carlo Bertazzo, Atlantia SpA – CEO, GM & Non-Independent Executive Director [22] ——————————————————————————– Just to — about the first questions that could have had room for more M&A or Abertis, taking account the last 2 larger acquisition that we are speaking about the — the last two acquisitions, we are speaking about EUR 1 billion in terms of enterprise value. And I’ll give you the right grammar in the second. But I think that really, taking around pandemic, taking account recently acquisition that they did 2021, which you are for dedicated to the integration of the assets and to improve the average life of existing assets with the landlords. And then we can see, again, maybe in 2022. And all — when the opportunity will come, we can say that the M&A activities could be — start again. About the situation of AP 7 and the details, I’ll leave the floor to Roberto Mengucci, but I think that you have more inflation. ——————————————————————————– Francisco José Aljaro Navarro, Abertis Infraestructuras, S.A. – CEO, Acting CFO & Director [23] ——————————————————————————– Carlo? Carlo Pete speaking. ——————————————————————————– Carlo Bertazzo, Atlantia SpA – CEO, GM & Non-Independent Executive Director [24] ——————————————————————————– Pepe, you’re right. I’m so sorry, I think that you have the right piece to answer about AP 7. Also overall, please add our information about the first question. ——————————————————————————– Francisco José Aljaro Navarro, Abertis Infraestructuras, S.A. – CEO, Acting CFO & Director [25] ——————————————————————————– Okay. So far, there is no news or any updates about the AP 7 situation. In accordant with the concession contract, it’s necessarily to wait until the end of August. And we will have a month to report to the ministry, what is the account receivable in accordance with the traffic differences between the expected and the real topic. And then the government has 6 months to pay or to appeal or to go act against our claim. That means it’s necessarily to wait a few months to have more visibility about what could be the reaction. ——————————————————————————– Operator [26] ——————————————————————————– Next question is Nicolò Pessina of Mediobanca. ——————————————————————————– Nicolò Pessina, Mediobanca – Banca di credito finanziario S.p.A., Research Division – Analyst [27] ——————————————————————————– Just a couple of follow-up questions. The first one on the airports of Nice. I’m wondering if you can provide an update on the negotiations with the authority on the recovery of the tariff cut of a couple of years ago. If this is something you are discussing and eventually on a potential compensation for the COVID impact? And second question, if you can explain the reasoning behind the transfer of Pavimental from Atlantia to ASPI. And if there is any relevant cash in for Atlantia holding company from this transaction. ——————————————————————————– Carlo Bertazzo, Atlantia SpA – CEO, GM & Non-Independent Executive Director [28] ——————————————————————————– Thank you very much for both questions. I think the first one, maybe you missed the answer of Mr. Marco Troncone, a very comprehensive answer about what ADR is doing to try to recover with the regulator, the pandemic, the COVID effect in the — I’m sorry. And about Nice, I think that with Franck on the line, it could be answered as the specific point because of his — in the concession agreement, the so-called Article 74. And Franck, could you try to provide some more details? ——————————————————————————– Franck Goldnadel, Aeroports de Paris SA – Executive Director, Chief Airports Operations Officer & MD of Paris-Charles De Gaulle Airport [29] ——————————————————————————– Yes. Thank you for the question. First of all, regarding the decision of the ISI regulatory a few years ago, we are still discussing with the IRT, the new regulator for the future. And especially, you’ll note that we agree on the fact to increase traffic last November. Tariffs — sorry, last November, 3%. Because of the investment program and the operational issues, the regulator agreed on the fact to recover new tariffs for the future, and we are going to continue for the next period regarding investment program and the economy of the concession. That is, on one hand, what we are working on. On the second hand, that is your second part of question regarding the pandemic crisis and the impact of the equilibrium of the concession. There are a special article in the concession agreement, regarding external effects on the equilibrium of the concession, and we started the discussion. We are not alone all the French airport discussing with the state because we are under a state concession agreement, and we started under this agreement and this article of the concession agreement, solution to compensate the COVID effect on the economy of the concession. ——————————————————————————– Carlo Bertazzo, Atlantia SpA – CEO, GM & Non-Independent Executive Director [30] ——————————————————————————– Thank you very much, Franck. And about Pavimental. I think there is — the sense is industrial rationale. Because at the end, I think that 80% of activity, construction activity is just to support the investment program, the mind change program of Autostrade per l’Italia. That’s — I’ll leave the floor to Roberto, because if I remember, there is a specific chart in his presentation, just describe how Autostrade per l’Italia intend to cover the entire life of running this kind of business. ——————————————————————————– Roberto Mengucci, Atlantia SpA – Executive VP & Highway Business Coordination Director [31] ——————————————————————————– Yes, Carlo. As I explained today, Pavimental cover the entire activities with Autostrade per l’Italia. Just to give you the numbers of the equity value, if I can remember, it was up EUR 15 million. Today, we had closed with revenues of Pavimental more or less EUR 500 million, and we are foreseeing in the 2021 to increase the revenue that are mainly due to activities provided by Autostrade per l’Italia up to EUR 600 million. We are also looking to evaluate opportunities on no captive market in order to achieve, at the end of the 2024, a value of EUR 1 billion of revenues for Pavimental. ——————————————————————————– Carlo Bertazzo, Atlantia SpA – CEO, GM & Non-Independent Executive Director [32] ——————————————————————————– Thank you, Roberto. I think that — I don’t know, we have had a room for in our question. ——————————————————————————– Operator [33] ——————————————————————————– And the final question is from Enrico Bartoli of Stifel. ——————————————————————————– Enrico Bartoli, Stifel Europe, Research Division – MD [34] ——————————————————————————– Sorry. So just a very quick follow-up. First of all, on the cost efficiencies that you managed to achieve in 2020. If you can give us some flavor? And how much of this you think would be sustainable in 2021 and in a normalized environment? And secondly, if you can give us a guidance on the CapEx you expect for this year. ——————————————————————————– Tiziano Ceccarani, Atlantia SpA – CFO [35] ——————————————————————————– Okay. Thank you very much, Enrico. On cost, we mentioned EUR 600 million of efficiency in 2020 versus ’19. This is basically EUR 200 million coming from reduced concession fees and the remaining EUR 400 million basically half coming from labor cost reduction and external cost for service in O&M. Some of these costs are coming from efficiency plan already approved by the Board of the record and concessions. So we think will be a cost efficiency that we can consider either for the future. But most of these are as a consequence of reduction of activities in airports, reduction for fee concession, which are basically related to traffic and the possibility for some of the company of the group to make reference to government proposal for cost reduction in Italia, Cassa Integrazione and chomage partiel in France. So I guess, no more than EUR 100 million group level will be the component that you can consider for long-term reduction at group level. ——————————————————————————– Carlo Bertazzo, Atlantia SpA – CEO, GM & Non-Independent Executive Director [36] ——————————————————————————– Thank you very much for this 2 hours at work that we spent together. And obviously, Investor Relator is continuing to be available for any kind of questions or clarification, comments about the presentation and also about the annual report that will be available in the coming weeks. Thank you very much. We appreciate a lot. ——————————————————————————– Operator [37] ——————————————————————————– Ladies and gentlemen, thank you for joining. The conference is now over, and you may disconnect your telephones.